ELECTRONIC BOOKKEEPERS

A powerful and user-friendly tool, the Quickbooks Bank Feed ramps up productivity by automating the entry of banking and credit card data into the accounting system.  When properly used, this feature can save hours upon hours of bookkeeping time.  The robust application also brings a new level of accuracy to the data entry process by eliminating human error. Surprisingly bookkeepers continue to cling to the clearly inferior and outdated method of manual data entry.  Change does not come easy. 

Remember when checks were prepared by hand using pre-printed stock and a typewriter?  It’s hard to image how bookkeepers could get all their work done when limited to what in retrospect is an archaic approach to paying bills.  By the same token it is astonishing that so many accountants and bookkeepers continue to manually enter credit card and banking data when a superior alternative is readily available.  When I ask bookkeepers why they endure the drudgery of manually typing row upon row of transactions, they tell me that it just ends up being easier or that it takes the same amount of time to manually enter transactional data.  This response flies in the face of both logic and common sense as well as my own hands-on experience with the tool.  When used consistently, the bank feed application works almost flawlessly. 

Many of my clients routinely incur 300 to 400 credit card transactions per month and another 100 or more bank transactions.  It could easily take a day or two to manually enter all that data.  By contrast the Quickbooks bank feed imports all of those transactions into the credit card register in a matter of seconds.  A user-friendly, color coded interface serves as a link between the financial institution website and the Quickbooks company file.  This buffer is essentially a spreadsheet that temporarily holds the data for editing prior to the final feed into Quickbooks.  The editing can typically be completed in less than half an hour.  Labor time is reduced by 80% - 90% or more.  Just as important as the speed of entry, data import improves accuracy by eliminating human error – transposition, transcription and other keypunch errors vanish as does the frustration of hunting for these mistakes. 

At its best, the bank feed tool can accomplish not only the import of the numerical components of a transaction, but also the assignment of the transaction to the proper account category based on auto-recall.  When used consistently, Quickbooks learns to link a specific vendor to a particular account on the Chart of Accounts.  With time a greater proportion of the monthly transactions are so linked and therefore fully recorded.  I recently imported the monthly credit card activity for my client’s Citibank MasterCard.  Of the 221 downloaded transactions, 172 were fully coded and required no further editing.  Think of it: 172 transactions were recorded at the speed of light!

The QB Bank Feed program is essentially an electronic bookkeeper and does all of the heavy lifting.  That paradigm truly revolutionizes the field of Business Management.  By automating almost 100% of the data entry, the time it takes to manage a client is cut dramatically.  We no longer employ bookkeepers in our practice.  We employ dataflow managers who can accomplish three to four times the workload of that of a traditional bookkeeper. 

Is the Bank Feed program perfect?  No, but it’s near perfect.  After the data for a given account has been imported into Quickbooks, the program compares the balance per the financial institution and the balance in the accounting register.  These two figures match almost, but not quite, 100% of the time.  Once in a while there may be a mismatch.  Typically the discrepancy is easily found and is often a single transaction that, for whatever reason, was excluded from the import feed.  These minor glitches are generally resolved in a relatively short period of time. 

To understand the data import process, let’s look at the anatomy of a journal entry. Every financial transaction has four components:

  • The date of the transaction
  • The name of the vendor
  • The amount of the transaction
  • The account from the Chart of Accounts to which the transaction is assigned

The Bank Feed downloads two of these components with 100% accuracy: the transaction date and the transaction amount.  That is the easiest part of the import process.  Yet with manual data entry those two components are the most susceptible to human error (keypunch type errors).  The other two components: the vendor name and account classification, may require additional editing.

Let’s now turn to those other two components.  The name that is fed from the bank into the buffer register may have extraneous identifying information that is of no value.  For example, a credit card charge at Starbucks may be identified in the buffer as:  Starbucks Inc. LA08567A-099.  That bank-feed name needs to be linked to the stripped-down vendor name Starbucks.   Quickbooks utilizes a naming algorithm to convert the bank feed name to the vendor center name.  That way you don’t end up with 25 variations of a single vendor in the database.  The naming rules may be edited to further refine the process and improve the outcome.

Once the bank feed vendor name is linked and converted to the Quickbooks vendor name, the transaction will be automatically assigned to the same expense category as that associated with the particular vendor.  Over time a greater proportion of the bank feed transactions are fully coded and require no further editing.  The percentage of transactions that are auto-coded are a function of the consumer behavior of the client.  For clients having a more routine and repetitive transaction profile (i.e., they tend to go to the same restaurants and the same department stores and the same gas stations) upwards of 75% of bank feed transactions are fully coded.

We are in an era where, like it or not, bookkeepers are obsolete.  The traditional model of bookkeeping and accounting, which is labor intensive and data-entry centric, is a thing of the past.  Data flow managers can process four times the volume of work as that of a traditional bookkeeper and can turn their focus to more substantive and challenging accounting issues.  This is revolutionary stuff and will drive down the cost of Business Management and the associated fees that are charged to clients.  Business Managers who fail to embrace this remarkable technology are at a competitive disadvantage and will soon fall by the wayside as the robo-bookkeepers take over.