What’s a bank feed and do you really need one?

Whether you do your own bookkeeping, or your accountant does it for you, chances are you’ve come across the term bank feed. But what is a bank feed, and do you really need one?

What is a bank feed?

A bank feed is a feature in bookkeeping software that automatically pulls your transactions in from your business bank account.

Instead of typing in every receipt or payment manually, your software connects securely to your bank and imports the date, description and amount of each transaction for you.

When you log in, rather than starting from scratch, your transactions will be ready waiting for you – all you need to do is categorise them.

How can bank feeds help with your bookkeeping?

Bank feeds can make your bookkeeping feel a lot more manageable.

Bank feeds save time

• If your transactions are already in the software, you don’t have to spend time keying in the details of each individual receipt and payment. You’re just reviewing and categorising them, which is a much quicker job.
• Some software even suggests what category to allocate each transaction to. The suggestions aren’t always right, but the AI learns as you go, creating even more time savings.

Bank feeds reduce errors

• Bank feeds pull the transaction details in directly from your bank, avoiding manual data entry errors like incorrect dates, amounts, typos, missed transactions or duplicated entries.
• The software will highlight if there’s a difference between the balance on your bank statement and the bank balance in your software.

Bank feeds help you stay up to date

• It’s much easier to keep on top of your bookkeeping when your bank transactions feed into the software automatically. You’re not then faced with a huge backlog at the end of the month, quarter or year.
• If you’re looking to build a consistent bookkeeping habit, bank feeds remove one of the biggest barriers: getting started. When the basic transaction details are already there, it’s easier to just sit down and get on with it.

Does all bookkeeping software include bank feeds?

Not all bookkeeping software includes bank feeds, and sometimes they’re a payable extra.

• Some lower-cost or free software options don’t offer bank feeds at all
• Some software providers charge extra for bank feeds
• Not all software connects with all banks – so check that the software you’re using can support a bank feed from your bank
• Not all bank accounts support bank feeds – so check that you can connect a bank feed to the type of account you have with your bank
• Occasionally, bank feeds glitch or need reconnecting – so it’s not always a case of “set and forget”

If you’re choosing software purely based on price, it’s worth checking whether bank feeds are included, or whether you’ll need to pay more to access them.

And, if you’re currently using software without a bank feed, it doesn’t necessarily mean you need to change. It just means your bookkeeping may be taking you longer than it needs to.

Why are some people wary of bank feeds?

A common objection I hear about bank feeds is that people don’t want their software to have access to their bank account. Most bank feed connections are one-way. Your software can download data from your bank account, but your bank can’t access what’s in your software.

Some software can be set up to make secure payments directly from your bank account. This is a separate facility from a bank feed, which is only available when you specifically set it up. Setting up a bank feed doesn’t automatically authorise the software to make payments from your bank account.

Another worry is that transactions could be going in and out of your business that you won’t see. This will only happen if you set the software up to post transactions automatically.

Most bank feeds download transactions into a holding area, ready for you to check and categorise at your convenience. Bank feed transactions don’t get included in your bookkeeping figures until you’ve categorised them.

Some software offers an automatic posting option, where the software either automatically posts a transaction in accordance with a “bank rule” you have set up, or uses AI to decide which category a transaction belongs in. Even if you choose to turn these functions on, you will always have the option to review and correct what the software has done.

What if you don’t have a bank feed?

Plenty of people manage their bookkeeping without a bank feed. Bank feeds are not a requirement of either the Self Assessment or Making Tax Digital tax systems.

CSV import

Most banks let you download your transactions as a .csv file (a simple spreadsheet format). You can then upload that file into your bookkeeping software.

It’s not automatic, but it’s still quicker than typing everything in manually.

You can import a week, a month, or a whole quarter at once. You’ll still need to review and categorise the transactions.

This works well if you like doing your bookkeeping in batches. You’ll need to be organised with your downloading and uploading to make sure there are no gaps or overlaps.

Manual entry

This is exactly what it sounds like — you type each transaction into the software yourself.

It’s the most hands-on option and takes the most time. The benefit is that you get to see everything that comes in to and goes out of your business bank account – a level of awareness that can be really valuable when you’re first starting out but isn’t always sustainable as your business grows or your transaction volume increases.

Conclusion

If you have a lot of regular transactions, want to save time, or struggle to stay consistent with your bookkeeping, a bank feed can make a real difference.

But if you’re just starting out, have a low volume of transactions, and want to use free or lower-cost software to manage your business’ bookkeeping records, csv imports and manual entry can still work fine.