Bookkeeping, bank feeds and real- time accounts

The concept of bookkeeping is relatively straightforward, monitoring income and expenses, together with various adjustments, to produce a profit and loss account. However, there is much more to the modern-day bookkeeping package!

The importance of bookkeeping and what programs make it easy to use bank feeds

While bookkeeping is essential to facilitate the creation of year-end accounts, it is only when you dig a little deeper that you appreciate the value of modern-day bookkeeping packages. At any one time, you can gauge your company’s financial health and well-being, which can help decide future actions. At the end of the article we have listed some of the more popular bookkeeping packages which include bank feeds, but for now we will focus on the importance of bookkeeping.

Understanding bookkeeping

In its basic format, bookkeeping is a record of income and expenses, but there is much more to modern bookkeeping. It is a critical means of:-

  • Recording financial transactions
  • Categorising income and expenses
  • Maintaining financial statements
  • Reconciling accounts
  • Projecting forward

This forms the foundations for financial reporting and the business decision-making process.

Informed decision-making

Financial data is critical when looking to make any decision about your business. Accurate and reliable bookkeeping provides you with an in-depth insight into the health of your business. Looking backwards and projecting forwards are critical elements of any decision-making process. A bookkeeping package can help you:-

Identify areas of growth

It can be a challenge to keep track of historical growth and the emergence of trends if you have various services or different strands to your business. You can identify which services or offerings are doing well by categorising income and expenses. The world of business rarely stands still, and what may have been popular yesteryear can be replaced relatively quickly; you need to stay ahead of your competition.

Cost-cutting opportunities

While headline profits are crucial to any business, it is vital to identify ratios such as expenses to income and ultimate profitability. If a particular service has seen a reduction in income, there may be opportunities for cost-cutting. We are starting to see the introduction of new cutting-edge technology which can create numerous opportunities to trim expenses. However, any cost-cutting opportunities should not have an impact on the quality of your client services.

Investment possibilities

Modern-day bookkeeping packages can identify the efficiencies of various departments, services and even people. You may find that the net income per person in a particular department is significantly higher than in other business areas. Assuming there is potential for scalability, investing in this area with additional resources such as people and equipment would make sense. While bookkeeping is about monitoring historical transactions, this demonstrates the ability to look forward.

Tracking profitability and growth

Very few businesses, whether providing products or services, are not faced with seasonal variations. Consequently, looking at profitability and growth over a relatively short period can be dangerous. Bookkeeping software should offer the ability to track profitability and financial developments over the medium and long term via trend analysis, instead of short-term timeframes.

Financial ratios

As mentioned above, financial ratios such as net income per person can be critical in assessing potential growth as you advance. To expand this further, if a business continues to grow, there will come a point when additional resources are required. The net income per person/department will plateau, and you may also see increased customer complaints and extended delivery times. Finding a balance between providing additional investment and maximising net income from existing resources can be challenging.

Trend analysis

Trend analysis of a specific measure can be helpful in isolation but put into context with other business-related trends; it can be a data goldmine. As humans, we can take in more information visually than we can when reading words and numbers. Switching as much information as possible into a visual format makes sense, saving time and further manual investigation.

Sometimes trends may have emerged weeks and months ago, but you only just noticed them from the data feeds. Graphical trend analysis would identify this earlier and should be an essential part of your business review process.

Legal and tax compliance

Whether looking at individual business contracts or the overarching array of business compliance and regulatory obligations in the UK, all companies face a number of legal/tax responsibilities. Issues in this area tend to be dominated by varying degrees of poor bookkeeping which can have significant consequences.

Fines, penalties and legal disputes

The financial consequences can be damaging if you are overdrawn at the bank, are late with delivery to a client, or have overlooked your legal obligations concerning a contract/delivery of accounts. The ability to incorporate various legal and tax obligations/reminders into your bookkeeping package is worth its weight in gold. Simple yet effective, it is surprising how many people fall foul of these relatively straightforward issues!

Preparation of accounts

Ultimately, your bookkeeping package should help you prepare your accounts in an orderly and organised fashion. The system should identify various tax and financial deadlines, create the relevant statements and, in many cases, forward these directly to third parties such as HMRC. The more you can assist your accountant in creating your accounts with clear, concise information, the more potential for long-term cost savings.

Cash flow, funding and loans

It can be tempting to grow your business as quickly as possible in the early days without considering funding and cash flow. Unfortunately, many “healthy” growing companies have been forced to close because of cash flow and funding problems. Cash flow is critical for several reasons:-

Avoiding financial crisis

As your business grows, you will likely require more products or materials to service your customers. This additional investment is being used to facilitate growing customer orders, which seems perfectly fine. However, if you are forced to pay for supplemental products/materials before you receive payment from your customer, this can lead to huge cash flow pressures.

The situation is more controllable with business-to-consumer transactions, but where it is business-to-business, your clients may demand extended payment periods. Retail operations may also be able to return a certain amount of goods even though you have invested additional funds to provide them. Cash flow is King in the business world, protect it at all costs!

Funding and loans

A good bookkeeping package will be able to identify cash flow squeezes and alert you to possible funding issues. You should also be able to compare and contrast the cost of loans and additional funding against projected income in the future. For example, if your net return were 30% and your loan to fund further growth is charged at 10%, it would appear to be a no-brainer. Outside funding can help leverage business growth, but it must be done in a controlled manner.

Scalability and expansion

Considering all of these different factors, you should be able to use your bookkeeping package to compare and contrast scalability and expansion options. While nothing is ever set in stone, a good package will help you identify the knock-on effects of improved business volumes on issues such as net returns, cash flow and funding requirements. Your plans may need to be adapted/scaled back, but this means that you aren’t looking to the future with blind faith.

Bookkeeping services and bank feeds

Even though many bookkeeping packages provide direct payment facilities through your company bank accounts, in this instance, we are talking about the automated importing of bank transactions. This is critical to maintaining accurate real-time reports, which can be used in various ways, as highlighted above.

While this has always been an option, the introduction of Open Banking, allowing you to connect your bank accounts with third parties through a technology known as API, has been revolutionary. The automated reconciling of bank statements against income and expenses allows you to maintain up-to-date records and identify potential anomalies. Priceless!

Popular bookkeeping programs

In the modern era, your bookkeeping package must be able to facilitate a direct link with your bank and the automated transfer of transaction data. Some of the more popular bookkeeping packages offering bank feeds include:-

  1. QuickBooks
  2. NetSuite ERP
  3. FreshBooks
  4. Zoho Books
  5. Sage Business Cloud Accounting
  6. Kashflow
  7. Xero
  8. FreeAgent
  9. GnuCash
  10. Wave Accounting

The above bookkeeping packages provide various services, some of which may not be relevant to small businesses. It is crucial to find a package which suits your specific scenario.


The importance of bookkeeping is obvious, but it is only when you dig a little deeper that you can identify specific benefits. Used correctly, many of these packages will be able to identify future cash flow issues, allowing you to make arrangements to avoid a financial catastrophe. The production of real-time accounts with bank account links means that you can retain total control of your business finances and see in an instant where you stand. You don’t need to wait until the year end!


Chris Wilkins FCCA is a Chartered Certified Accountant, Registered Auditor and the managing partner of Wilkins Southworth based in Barnes, South West London

Share this post