Bookkeeping, in general, can be challenging for a business owner. However, not knowing certain terminology that is used in the field of accounting can make doing your own bookkeeping even harder.
With that in mind, I have decided to do a series of posts on my blog where I will do my best to explain some common terms used in bookkeeping are and what you, as a business owner, should know about these terms. My hope is to educate business owners so they will feel comfortable discussing their business finances with their accounting professional. Whether the accounting professional you rely on is a bookkeeper, accountant or a CPA, there are certain terminologies that can help you navigate the magical, mystical world of accounting.
So, let's get to it...
BANK FEED - What Is It?
When you hear the term bank feed from your accounting professional, we are not suggesting you go to your bank and serve the bank employees donuts (though that couldn't hurt).
What we mean when we say bank feed(s) is that you need to connect your accounting program to your business bank accounts. This is a great feature that can be very helpful.
8 Thing You Need To Know About Bank Feed(s)
You can set your bank feed(s) to upload all your previous days bank transactions automatically to your accounting program. This way you, or your bookkeeper does not have to manually enter each bank item.
Even though the bank items upload each day, they do not actually go into your accounting books. You or your bookkeeper must click to add, match, or transfer them. This way, each transaction is coded correctly before it is entered into your accounting books.
Never just click ADD on an item in your bank feed. There are usually 3 options for each item listed in your bank feed and those are: Add, Match and Transfer. You need to make sure you choose the correct one for that transaction or item. Otherwise, you will make a mess in your accounting books and that is bad.
Most online software allows you to create and set "rules" for your bank feed items. This is important and makes accepting new transactions in your bank feed easier and faster. Just be sure you look at the transaction to make sure the rule applies in each case.
Never code a bank transaction to "Uncategorized Expense" or "Uncategorized Income". These two accounts should not be used.
If you accept an item and you need to change the account it is coded to, you can do that. However, it can cause problems in your books, especially if that item has been balanced. To be safe, ask your accounting professional before doing this.
Automation leaves less room for operator error. It is true, most of us accounting professionals are close to perfect (ok, maybe not that close) but mistakes can be made by you or whoever is entering your data. Using an automation feature like bank feed(s) can help in reducing data entry error and can also be faster. (However, I caution that it is vital to reconcile each account at the end of each month. I have caught errors in the bank feeds through reconciliation.)
When in doubt, ask your accounting professional. Accepting the transactions in your bank feed is usually the first step to getting your bookkeeping information into your accounting software. You want it done correctly so there are no problems later in your bookkeeping.
I hope this short post helps you to understand a little more about what the bank feed feature (aka bank feed) is and how it can help you or your bookkeeper manage your accounting books.
If you have any further questions about this or other bookkeeping subjects, please contact me at Rebecca@RHBizSolutions.com. I look forward to talking to you about your bookkeeping needs.
Here's To Your Success!
Rebecca Hurt
RH Business Solutions