You may have heard about open banking without being entirely sure what it means—or why it matters to your business.
In simple terms, open banking allows you to securely share information from your bank account with an authorised app or service. You choose which provider can access the information, which accounts it can access and when that access should end.
For small businesses, one of its most useful applications is connecting a business bank account to accounting software such as Xero, QuickBooks or Sage. This creates a bank feed, which regularly imports transaction information into the accounting platform without requiring you to enter every transaction manually.
Here are three ways open banking can make your bookkeeping easier.
It reduces manual data entry
Without a bank feed, transactions may need to be imported from bank statements or entered into the accounting software manually. This takes time and creates more opportunity for transactions to be missed, duplicated or entered incorrectly.
Once a compatible bank feed has been connected, your bank transactions are imported directly into the accounting software. The transactions then appear ready to be reviewed and reconciled.
This removes much of the repetitive work involved in transferring information from your bank account to your bookkeeping records. It also means your bookkeeper can work from more current information rather than waiting for you to download and send a bank statement.
A bank feed does not, however, remove the need to retain invoices, bills and receipts. These documents provide the supporting detail needed to understand what a transaction relates to and whether it has been recorded correctly.
It helps your bookkeeping stay up to date
Importing the bank data is only the first step. Each transaction still needs to be reviewed and matched to the appropriate invoice, bill, expense or accounting category.
Because transactions arrive in the accounting platform automatically, your bookkeeper can reconcile them more regularly. They can also identify unclear transactions, missing documents or unexpected payments sooner.
For example, a bank feed may show that a payment was made to a supplier, but it may not explain what was purchased or provide the supporting invoice. Your bookkeeper can raise the query while the transaction is still recent, making it easier for you to provide the answer.
At Vookeeper, bookkeeping is completed weekly. When your bank feed is working and your records are available, your dedicated bookkeeper can keep the accounts moving throughout the month rather than allowing everything to accumulate until the year end.
It gives you better visibility over your finances
When your business bank accounts are connected to your accounting software and regularly reconciled, you can get a clearer view of the money entering and leaving the business.
Depending on your accounting setup, you may be able to view information from several connected accounts in one place. This can make it easier to review cash flow, monitor spending and understand the business’s current financial position.
You will not need to piece together information from several bank statements before getting a general picture of what is happening. More complete and current bookkeeping records can also support better conversations with your accountant and more informed business decisions.
Is open banking safe?
Open banking is a regulated method of sharing financial information. You must give permission before an authorised provider can access your account information, and you can withdraw that permission.
When connecting an account, you should be directed to your bank’s own secure environment to approve the connection. You should only use recognised accounting software and regulated open banking providers, and you should never give your online banking password directly to your bookkeeper.
Some bank feeds may occasionally need to be refreshed or reconnected. Your accounting software should let you know when further authorisation is required.
Open banking supports good bookkeeping—it does not replace it
Bank feeds make the movement of data quicker and easier, but they cannot always determine what a transaction was for, whether the VAT treatment is correct or whether supporting documentation is missing.
That is where your bookkeeper comes in.
Your bookkeeper reviews and reconciles the imported transactions, checks the available records and contacts you when more information is needed. The technology reduces unnecessary administration, while the human review helps ensure the bookkeeping makes sense.
Make bookkeeping easier with Vookeeper
Vookeeper provides straightforward online bookkeeping for UK small businesses.
Your dedicated bookkeeper completes your bookkeeping each week, reviews the transactions imported through your bank feeds and raises any queries that need your attention. You can communicate with your bookkeeper and securely provide information through the Vookeeper client portal, keeping your bookkeeping conversations organised in one place.
Our fixed monthly plans include weekly bookkeeping, a dedicated bookkeeper, VAT bookkeeping where required and access to the Vookeeper portal.
Connect your accounts, leave the weekly bookkeeping to us and keep a clearer view of your business finances.
