Friday, June 20, 2014

Automatic Bank Feeds in QuickBooks Online




There’s a trend among some users of QBO to consider automatic bank feeds as a way to eliminate reconciling of the accounts. This is wrong, so wrong, and I’d like to tell you why.

1. You can’t trust them. They work well, when they’re working, but too often I see bank activity downloaded into QBO that leaves out transactions.

2. The automatic features in QBO make for simple use, but if you just accept all transactions as they download, there’s the potential for misclassification. For example, QBO will remember what the previous expense was for a vendor, and will fill it in. However, that may not be the correct expense at all.

3. Income downloading is especially tricky if you’re unfamiliar with it. If you issue invoices, you should be receiving payments from the Transactions menu. If you don’t, and QBO downloads those deposits, it won’t have anything to match to. Many times I’ve found that these transactions have ended up as Income, when there’s already an invoice for it. This will quickly double your income, in ways that we don’t want it to double. (We want to double it by increased sales, not by tricking the books.)

4. If you have multiple deposit items on a deposit, such as several checks, QBO will need you to manually match those deposits to the received payments. For example, if you receive large numbers of merchant deposits, QBO will enter those as income if you don’t match them. I will often just exclude the credit card deposits because if everything else is done properly, they’re already accounted for. If they match, even better.

5. If you have many transfers between bank accounts, there’s a high likelihood QBO will be so confused that these will not end up in the right place without intervention. Often these transactions will show up as an Other Asset, or an Uncategorized Expense, and if you have multiple accounts with transfers between them, you must verify the transactions before accepting it into your books.

6. And last of all, you can’t trust them. I know I said this before, but it’s such an important detail. Even with all the technology working in our favor, we need to verify. We need to reconcile. We need to look at what’s showing up, and we need to make sure it’s properly classified. Otherwise, we might as well be entering random numbers.



There’s a reason us accountants do the things we do, and it’s not because we like to fill our time with busywork. It’s because verifying and reconciling are the best methods we have to ensure that every transaction in our books is proper, classified correctly, and is placed where it belongs. It may seem time consuming, but it takes twice as long to fix past errors than it does to get them right the first time. More time = more money, and there’s much to be said for having accurate financials when you need them.

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