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Banking – the new frontier in Cloud Accounting

Bank reconciliations have long been the bane of many a small business, but at the same time, it is vital to complete this process on a regular basis to ensure integrity of the accounts. My advice to every business owner before commencing the BAS is to ensure every bank account and credit card account is fully reconciled and for some this can be a laborious and time consuming process. So can cloud accounting software assist business owners here?

In 2008, Xero landed on the Australian marketplace with visionary (revolutionary) banking functionality designed to remove many of the major headaches associated with the bank reconciliation process with its bank feeds and bank rules. Whilst this solution is ideally suited for the micro end of the small business market, it set a new benchmark in user expectations and one that other accounting software suppliers have been scrambling to catch up with. So six years later, how are the major players positioned?

QuickBooks Online (QBO) which is working hard to gain market share in the same space as Xero is certainly trying to provide more depth to its bank feed functionality, but unfortunately still has some annoying glitches that fail to delight. Recently the functionality was enhanced so that a receipt transaction can be coded with a tax code, however QBO then uses a default item for posting to the accounts, you cannot select an item to get the correct income account, a missing link which I found very mysterious. I can match a cash receipt against an outstanding customer invoice but the Xero functionality that automatically finds outstanding invoices of the same amount as the receipt and offers suggestions I find more helpful. The QBO solution also doesn’t offer suggestions based on past transactions and overall remains more cumbersome and less functionally rich than Xero.

MYOB was able to climb aboard the bank feed bandwagon when it acquired BankLink back in 2012. It now supports easy download of bank transactions, matching against existing transactions plus transaction rules for new transactions. You can easily create new transactions on the fly. The functionality is not as comprehensive as Xero but it is visually appealing and easy to use.

Reckon finally introduced ’Bank Feeds’ to its Hosted product last month and despite much fanfare it disappointed more than it delighted as it just automated the process of logging into the banking software, exporting transactions to a file on your local computer and importing it into Reckon Accounts Hosted. So for those who were manually importing banking transactions, for $3 a month, you are probably saving more than $3 worth of time but it doesn’t really stack up against functionality in any of its competitors

Reckon One has fared a little better. It does have bank feeds as well as manual downloads from the bank with hopefully some enhancements on the way. You can set up bank rules based on description or amount and some other options. However there are quite a few limitations – cash must have been recorded in or out for a match to work – i.e. I can’t match a cash receipt to an invoice that has not been marked as paid and it doesn’t always make suggestions based on past entries. So again it has a way to go, but a promising start.

Since I recently reaccredited in Saasu, I thought I would check that software out also. The bank feeds module is still in Beta but looks to be reasonable at this stage although hopefully it will have a few more bells and whistles added as it moves out of beta. It will suggest a match to unpaid invoices or you can add a transaction. It doesn’t look as though bank rules is a supported feature at this stage

Overall, I still find the functionality with Xero to be the most comprehensive. There are features I don’t like, e.g. only having 10 transactions displayed on a page and no columnar sort options on the main reconcile screen are annoying limitations. I love being able to sort on any field and have a complete list on one page as I can in QBO but despite this the phrase coined by Intuit ‘design for delight’ does I think apply to Xero here rather than QBO at the moment.

And despite still leading the pack in Banking 1.0 Xero hasn’t sat back and waited for the other cloud providers to catch up, it has clearly demonstrated that as far as vision is concerned it is second to none with its release of Banking 2.0 in New Zealand. The objective is to make accounting software and internet banking complementary with data flowing seamlessly between the two worlds – definitely some customer delight here and hopefully something we will see in Australia soon.

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