Bank feed

What a feed does and does not do

A feed saves data entry and reduces typing errors. Transactions arrive in a review queue, and you or your bookkeeper match them to invoices and bills, or code them to accounts such as supplies, insurance or sales. Many packages let you save rules that code repeat payees automatically.

What arrives is the bank’s version of events: a date, an amount and a short description. It does not say which invoice a customer was paying, what a supplier charge was for, or whether a card payment was personal. Those answers still come from invoices, receipts and the people who know the business.

An illustrative example

A customer owes two invoices of $600 and $400 and pays both with one $1,000 transfer. The feed shows a single $1,000 deposit with a bank reference. If it is matched to only the $600 invoice, the other invoice looks unpaid and the customer receives a reminder for money already sent. The fix is to apply the deposit to both invoices. The numbers are round and ignore sales tax.

The same queue might also hold a $90 grocery charge made on the business card. The feed cannot tell that it is personal. Someone has to notice it and record it as an owner draw or a shareholder loan movement, depending on how the business is set up.

Common problems

Duplicates appear when the same transactions arrive by feed and by a manual file upload. Gaps appear when a connection expires and nobody notices. Transfers between your own accounts can be coded as income and expense unless they are matched as transfers. Auto-coding rules can quietly repeat a wrong category for months.

Be careful with tax. A line that looks like sales tax in a feed is not proof that it can be claimed. An input tax credit generally needs a supporting invoice or receipt with the required details, and the Canada Revenue Agency expects your records to let you work out what to collect, pay or claim.

The feed is not the record

The Canada Revenue Agency says to keep bank statements, deposit slips and cancelled cheques, and generally to keep records for six years from the end of the last tax year they relate to. Statements you receive electronically should be kept in a readable electronic form. A feed that you can switch off or lose when you change software is not a substitute.

Reconcile each account to its statement on a regular schedule so that missing, duplicated or mis-coded items surface.

What to discuss with your accountant

Ask who reviews the feed queue and how often, which rules are allowed to code automatically, and how personal charges and transfers are handled. Agree where statements are saved and who checks that every feed is still connected. If you are changing software, ask how the history will be kept.