What is Open Banking?
Have you heard of open banking, but didn’t know what all the hype was about, or how it could benefit you? In simple terms, open banking gives you greater visibility of your finances by enabling you to share your banking data via a third party, which then empowers you to have a holistic view of your bank accounts. Therefore, it’s not just you or your bank that can access your financial data securely. Nowadays, there are services that enable you to share your account information with another regulated company i.e. fintechs, merchants, currency exchanges and other digital platforms who will allow the data to be visible in one platform.
Here are 3 ways that Open Banking could make your bookkeeping easier:
It automates the import of data
If you’ve been in business for a while, then you would know that accounting platforms require documents, bank statements etc to be uploaded onto the system manually. In fact, many accounting platforms still require and rely on data being uploaded in this way.The process of manually uploading documents is inefficient and can result in mistakes caused by human error.
Open banking is king! Accounting software, like Xero, Quick Books and Sage can easily access your customers’ data in real time directly from their business bank account - also known as bank feeds. The platform will initiate a seamless process of getting data from the bank. How it works is by aggregating and copying the list of transactions on the screen of users’ online banking portals, then it automatically cleans up the list, removes duplicates and sends it to your accounting software as a feed. The financial information needed for your bookkeeping gets automatically uploaded to your accounting software, so you won’t need to go searching for additional bank statements to complete your bookkeeping. You can feel confident that the data is up to date and reliable because of the automated bank feed.
Swifter processing of data
Since banking data is automatically imported into your accounting platform, the bookkeeping is then in a prime position to reconcile transactions right away and in real time. The bank data that is usually unfiltered is automatically sorted into spend and received positions.
Every transaction needs to be matched to a sales invoice, a bill, an expense claim or directly to a nominal account to make sure the accounting records are up to date. So having bank feeds that are sorted and understandable are immediately ready to process, saving time.
You get a clearer overview of your business finances
One of the benefits of open banking is that you can see all your business accounts all in one single view. This means that you won’t need to log into multiple accounts to understand your financial position. You can simply see it all in one place and have a better grasp and control of your financial situation without needing to put the pieces together like a jigsaw puzzle - making your bookkeeping streamlined and manageable. Leaving you to make informed decisions about your business’ cash flow.
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