Founder & CEO Countingup
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Banking on the cloud: The accounting bank is here

25th Mar 2020
Founder & CEO Countingup
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Are you using an accounting bank? Of course not. Accounting banks don’t exist, yet. 

That was the opening to this article I wrote for the ICAEW Chartech magazine in October 2017. Fast forward to today and the worlds of banking and accounting have collided. The accounting bank is alive and well. 

What are the implications for accountants and clients?

Context and a brief catch-up since the original article

In 2008 I founded the cloud accounting software Clear Books. During my nine years as CEO, I was fascinated by the concept of a bank account that always reconciles. It seemed to me that an easier, time-saving way to run a small business would be to use a bank account that is also the accounting software.

I was inspired to the extent that I set up Countingup to turn the accounting bank idea into a reality.

Banking is the foundation and that’s where Countingup started. On 21 January 2018, we launched our first business current account (mine!). It’s been a fast-paced and exciting journey from there. The numbers are already staggering. Three million transactions later and nearly £1bn has been transacted through more than 20k Countingup business current accounts.

Business account opening at breakneck speed

In the 2017 article, I hypothesised that a barrier to opening a bank account is the time and effort involved. The visit to a branch to complete a 17-page paper form with a four-week wait for a decision. This is a frustrating process for a company getting started. For accountants, it slows down the onboarding of new clients. 

I suggested that in the new fintech world, business account opening would be rapid. We’ve proven that. It takes a few minutes to open a Countingup current account. Our record at last check was three minutes, 43 seconds.

The banking functionality includes what you’d expect from a bank: sort code, account number, Mastercard, direct debits and faster payments.

On this foundation of fast banking, how does built-in accounting transform productivity for accountants and clients?

The true single ledger

At the heart of a bank account is the cash ledger of debits and credits recording the real flow of payments in and out. At the heart of cloud accounting software is the cash ledger of debits and credits replicating the flow of payments in and out. 

Having banking and accounting together, pulling from one data set, in real time ensures that there is only one true single ledger. It’s the central customer record for a small business and the one source of truth. Think sales invoices, bills, journals, profit and loss, balance sheet and trial balance all sitting within the business current account. This has several benefits:

  • Real-time: When banking and accounting are separate you can only assess business performance after the weekend has been spent doing the books and the accounting records are up to date. With the true single ledger, the accounting records are created in real-time, automatically.
  • Classification: With the true single ledger transactions are automatically classified in real-time as Mastercard payments are made. This is possible due to the incredibly rich transaction data available to banking providers. For example, we know the specific merchant for each transaction. When coupled with machine learning this makes automatic classification possible. 
  • Completeness: When using bank feeds it’s possible that imported transactions are mistakenly deleted or don’t get imported properly.  Some things inevitably fall through the gaps in the transfer. With the true single ledger there is certainty that bank transactions that are supposed to be recorded are indeed recognised in the financial statements. 
  • Occurrence: When using bank feeds it’s possible that imported transactions are duplicated. With the true single ledger there is certainty that bank transactions recognised in the financial statements have actually occurred.
  • Accuracy: With the true single ledger there is certainty that bank transactions have been recorded for the correct amount, on the right date. 
  • Bank feeds: Aside from duplicates, omissions and deletions - using bank feeds also requires setting up the integration in the first place and re-authenticating every 90 days. Integrations can and do break. With the true single ledger there’s no communication gap to bridge, it just works.
  • Bank reconciliation: With the true single ledger there is no need to keep copies of bank statements nor reconcile the month end account balances back to bank statements. It just works.
  • Receipts: Clients are prone to forgetting receipts stuffed in pockets and glove boxes. When it comes to doing the books some receipts are inevitably misplaced. Time is wasted chasing for them, or money is wasted not accounting for them. With the true single ledger a payment instantly triggers a push notification for the client to snap and attach a picture of the receipt for their bookkeeping records. The receipt is then automatically linked to the correct transaction.
  • Payments received: A client knows a sales invoice has been settled when they’ve logged into their accounting software and matched payments (into their bank) to invoices (sent from their accounting software). The true single ledger does both. When a payment is received, the invoice is automatically reconciled as paid. An additional benefit is that invoices can be chased at the press of a button with absolute confidence that they remain unpaid.
  • The number of apps and the learning curve: The true single ledger means you don’t need two or three integrated apps to run a business. You just need one. This is far simpler for clients.
  • Bills: When banking and accounting are separate, clients spend time jumping between systems to pay bills. With the true single ledger a bill is created and a date is set for its payment, all in one quick step. When the date arrives the payment executes automatically.
  • Cost: The true single ledger is more cost-effective than paying for both a bank account and an accounting app.
  • Time saved: All these benefits of the true single ledger come back to one key tenet; they save time. In 2007 when the switch from desktop accounting software to the cloud started, the functionality was the same (invoices, profit and loss etc). The big difference was flexibility - anytime, anywhere access and the ability to collaborate with clients in the cloud. It was all about saving time. The true single ledger is the next advance in time-saving for accountants and business owners. 
  • Making Tax Digital (MTD): The time-saving benefit of the true single ledger becomes even more relevant with the backdrop of MTD. Clients will need to keep digital records and do quarterly tax submissions. For clients using the true single ledger this will be effortless.

The impact of the true single ledger on accountants

“If I was brave enough I’d get rid of all my sole trader clients because they are such a hassle, but they still bring in £60k revenue”. That was the response from the first accountant I pitched the true single ledger idea to, more than two years ago.

The accuracy and automation achieved through the true single ledger makes managing such clients far more efficient. This means lower margin sole trader clients are now more profitable. They become clients to hang on to - perhaps you can now accommodate more of them!

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Replies (3)

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David Ross
By davidross
21st Sep 2020 12:07

This is all very interesting, and I am tempted, but it seems to be an Apple-style monoculture.

Would that a client started using CountingUp on 1 April 2020 and did no other transactions in the year to 31 March 2021. Ping - Tax Return done!

But in the real World they will start in September, have cash transactions and already have been using another Bank (neither of which, it seems, CountingUp addresses)

Could Tim please come on here and answer these concerns? He might have another accountant client as a result!

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Replying to davidross:
Tim Fouracre
By timfouracre
24th Sep 2020 07:05

Hi David - as an accountant you can access client records via our Accountant Hub (cloud accounting software). Here you can process journals to bring in opening balances etc.

More on the Hub here:

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Replying to timfouracre:
David Ross
By davidross
24th Sep 2020 09:54

So it's a No to feeds from other Banks then. I am not won over

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