Any non-Tax accounting topics go here.
QBO Bank Feed
OK so after many years of keeping this largely to myself, I have to ask - what is the point of a bank feed? We have numerous clients where the accounting records consist of nothing more than what ends up on the bank statement. The bank balance is miraculously reconciled to the statement each month. Some clients enter some, but not all transactions, so that leads to transactions being matched. Other clients do a pretty good job of using the memo line to describe a transaction. What if we end up accepting the bank feed entry? Does the thoughtfully-written memo disappear into the ether?
My employer thinks I have a closed mind over this (and other) topic. He wishes to be more than a tax shop and to sell added value services to clients. I have tried to explain to him that I do not understand why relying on the bank feed facilitates that (which is what provoked the closed mind comment, I think). It seems to me that if a client desires quality information, it is just as easy to get into a regular pattern of posting to the accounting records and doing a proper reconciliation.
I am working through the QBO certification, in the hope it will give me a better understanding of the software. So maybe I just haven't learnt why bank feeds are important. Can anyone enlighten me, please? I should mention that I learned accounting at high school in Scotland using pen and paper and the first few years of my working life were with manual systems.
I haven't worked with QBO bank feeds, but I imagine they work the same as desktop.
The point of them is to eliminate manual keypunching, pure and simple. If someone enters all their transactions manually, great, but look at all the time spent, and the possibility of typos and other errors, which hopefully will be caught in the reconciliation process.
The "rules" that you can teach to Quickbooks for processing bank feeds can make data entry very easy. Based on the info downloaded, the transaction can be assigned a payee and account automatically, and of course the date and amount are also captured.
re: matching. If the transaction has already been entered, usually QB can match the import data to the existing transaction and then it will skip the import for that transaction (so no, it won't overwrite the memo field). So, you can effectively use bank feeds in a hybrid fashion (part manual entry, part auto download).
For example, I use QB for my own personal financials. I manually enter the "big" transacts as I make them, but I would be bored mindless if I had to manually enter every grocery store and gas station transaction by hand, and I probably wouldn't do it in detail. Downloads makes very quick work of that.
For several decades last century, I had my own double entry bookkeeping system (written in the venerable R:base system, a competitor of dBase back in the day). I collected all my receipts and then once a week or so had to keypunch them in. I'd never want to go back to doing that again, I regret the hours of my life I wasted doing it.
The thing about bank feeds is they are excellent when they work properly AND they are being managed by someone that knows what the heck they are doing. They become an absolute nightmare when the opposite is true. I use bank feeds for my personal and business accounting, but really dislike seeing clients use them in almost every case. Why? They create problems by not paying sufficient attention to the account activity. Worse, unlike QBD, QBO will automatically create adjusting entries to force a reconciliation and those entries get posted to an income statement expense account called "Reconciliation Discrepancies." Sure, they should be cleared out, but no one ever does. Intuit does an excellent job of promoting terrible bookkeeping by allowing everyone with an ability to buy software to think "I got this."
Back to a scenario where the feeds work properly and there is a brain attached to the arm moving the mouse. If a transaction is already entered, it will typically automatically match up and the bank feed transaction is disregarded. Sometimes, you need to look for an existing transaction to match up, such as if it was posted to wrong account or dollar amount is off. Also, if it is a recurring transaction and a rule has been created, you will be able to tell when that rule has been applied, but it takes a look of the eye to pay attention and notice, because sometimes the rules end up being overridden by a click-happy user, or no longer applicable.
Now let me give you an example of when I HATE bank feeds, or any automatic feeds into an accounting system, when not done routinely by someone that understands what to look for and why. I have a client who relies on their POS and merchant processor feeds to automatically post sales transactions to QBO, and bank feeds for three bank accounts and two credit cards. During 2018 (and likely 2017, but that is not my concern at the moment), easily over half of the transactions that are on the bank statements are completely missing from QBO. They either never made it into QBO through the feeds, or were deleted (former is likely culprit, which I have seen happen many times). Deposits are not matching up, and instead just end up sitting in undeposited funds for perpetuity.
Another issue is the banks themselves. Some support QBO, but not QBD. Some charge for a QBD feed but not for a QBO feed. There is no consistency, and banks also update their systems with no regard for what customers will face when their feeds are broken. What happens more often than not, in my experience, is the customer(s) create a mess trying to resolve a broken feed rather than getting their accountant involved where it can be kept as clean as possible.
When done correctly and routinely used, they are an absolute life saver in terms of efficiency. When done in the hands of someone that does not understand how and why they can create issues, they can be a nightmare. I encourage bank feeds when used by competent bookkeepers and accountants, yet highly discourage them being used by clients unless they have a solid grasp of bookkeeping, at minimum. Bank feeds make bookkeeping/accounting appear too simple, and people tend to then treat it as such and miss critical steps, INCLUDING actually reconciling the accounts.
Intuit does an excellent job of promoting terrible bookkeeping by allowing everyone with an ability to buy software to think "I got this."
About the only good thing is the account called "Ask My Accountant". At least I can find all those entries, rather than posting/hiding them somewhere in the GL.
I agree 100% with the entire previous post! Reconciliation discrepancies with more than $15,000 per month (really?? cash is off by $15,000 and you don't know why???). A gazillion vendor names such as "transfer to XXX 112018", "transfer to XXX 113018", etc. Ridiculous! Makes 1099 reporting a nightmare. And again, the undeposited funds account. Nightmare!
Thanks for the comments. My employer outsources bookkeeping to India and, today, we have told them not to do bank feeds for our largest client. We had duplicate entries for a very large credit card bill for almost all of 2018 which buggered up the numbers for state extensions due today. They also dumped about $300,000 in expenses straight into Ask My Accountant, which they were specifically told not to do.
Cornerstone, you articulated many of my concerns. Your last paragraph, in particular, resonates with me.
Powered by phpBB © phpBB Group.
phpBB Mobile / SEO by Artodia.