Bank Feeds Explanation

“Bank Feeds” is a term being used to describe the automatic transmission of bank transactions into Accounting Software.  The Accounting Software uses third party applications such as Yodlee or BankLink or direct file transfer to download the transactions from the Banks.  An authorisation must be provided to the Bank to link the bank & accounting software.  This process can vary depending on the bank and the software.

Setup

ü   Initial setup requires authorisation to link the Accounting Software with the Bank used by the client.  There are 2 methods used to provide authorisation:-

1. Authority form signed by the client and sent to the Accounting Software company.  This form is typically produced through the software and a different authority form is required for each bank or credit card to establish the bank feed.
    
2. Provide your Online Banking Client ID# & password which is used by some accounting software to access & download the bank transactions from the banks online services. (Check your terms & conditions with the bank & review security)

ü After authorisation, you are required to create a link in the software between the respective bank and/or credit accounts set up for bank feeds and the appropriate account in the accounting software.

ü All Software allows changes to the bank feed setup including passwords. 

 

J  You are now ready to receive Bank Feeds !!!

Retrieving Bank Feeds

Transactions will either be automatically downloaded when you login or you are required to select the Bank or Credit Card you wish to retrieve & click on the update/retrieve button.     You may be asked to key in clients login and password

Processing Transactions received

All software will download the bank feed transactions in to a bank feed transaction screen for the operator to either match, create or transfer transactions within the accounting file.

·    Each Bank Feed Processing Screen will commonly show the bank feed transactions on the LEFT & the transaction that has been found or created in the software on the RIGHT. 

·    Upon download, all software will intuitively try & match bank feed transactions to existing transactions within the accounting file.

·    The software uses the bank feed transaction field’s description, date or amount to provide a possible suggestion for matching.

With the remaining unallocated transactions either:-  MATCH - Find an existing transaction within the accounting file. OR

CREATE - Create transactions with the accounting software, allocate an account, add a contact if required & define the tax code.  This may include making a customer or supplier payment to clear invoices.

 

ü Create Rules

Most accounting software has the feature of creating rules which will enhance the automatic matching. A rule is a ‘criteria’ set that can automatically find a transaction, apply it to the account & add a description in the memo field. Some software will allow multiple conditions which helps to marry the bank feed transaction to the rule.

All rules require the following:- 

1. Rule Name – A name that resembles the transaction ie Merchant Fees
2. Stipulate which Bank account the rule relates to
3. Description: This description must match ‘some part’ of the bank’s description’ for the software to find the transaction & automatically match it to the rule  See below ‘merchant fees example’ you would use MERCH FEE as the description in the rule

Bank Statement Description
AUTOMATIC DRAWINGS
MERCH FEE000044455566 ABC ARCHITECTS 00233

Allocate an expense or income Account for the transaction

The rules within all accounting software will apply the rules on download of the bank feed transaction & either approve automatically or ask the operator to approve.

Bank Reconciliation
The Bank Reconciliation process differs once Bank Feeds are operational. All transactions downloaded will typically be flagged as ready for reconciliation within the Bank Reconciliation screen.  Therefore, a bank balance at a point in time is all that is required to reconcile the bank. 

Daily Bank Balance is either shown on the Dashboard of the accounting software or you are required to obtain the balance via online banking or statement.

Government's Grants and Assistance Finder

The Grants & Assistance Finder tool is an Australian Government initiative that offers simple and convenient access to all Government information, forms and services you may need to plan, start and grow your business.

The state and territory governments, the Australian Government and some local councils provide grants and other funding programs which may require time and effort to locate and understand.
The Grants & Assistance Finder tool allows you to search with ease for relevant business grants available to businesses in categories ranging from innovation and employment to the environment.

Some key features of the service are:

• The ability to choose multiple states and territories;
• A 'favourites' setting to save grants you are interested in;
• A question and answer filter to narrow your search results; and
• Tabs for 'new' and 'most popular' grants.

The Grants & Assistance Finder tool is free and can be accessed here.

Budgets and Cash flows – explaining the difference

The difference between a budget and a cash flow forecast can sometimes be confusing. They can seem to show similar information yet both are very different and have different uses.  Both are essential for the accurate financial management of your organisation

 

A budget details what you plan to do with your finances for the relevant period of time.  This is usually over 12 months, and focuses on profit.  In addition:

• Accruals and other non-cash adjustments such as depreciation are often included
• A Budget also reflects the planned objectives of what the organization is trying to achieve and is linked to the strategic and business plans.
• A budget also provides a benchmark to then monitor performance. After each month you can compare what actually occurred against what was budgeted or planned to occur
• Usually the full year budget is broken down into months

A budget is NOT used to monitor the amount of cash in the bank accounts.

That is where the cash flow forecast comes in.

 

A cash flow forecast details when the actual receipts and payments are likely to occur.

·    A cash flow forecast reflects when the actual income and expenditure is transacted into/from the actual bank account

·    It is not based on accrual accounting and adjustments, such as, depreciation are excluded

·    The full year cash flow forecast is mostly broken down into a month by month basis.  But in some instances it can be further broken down into fortnightly or even week by week depending on the circumstances

 

The main difference between a budget and a cash flow forecast is based on:

1. The type of the transaction and;

2. The timing when receipts and payments will occur

As a simple example: a budget will record the income when you have sent out the invoice whereas your cash flow will record it when you actually receive the amount into your bank account.

One point worth mentioning is not to assume that debtors will pay the following month.  Often it may be later which is why it is important to know your Average Debtor Days which may show that payment occurs typically 64 days after sending out the invoice.

This also highlights the value of knowing some important Key Performance Indicators (KPI’s) such as:

·        Debtor Days

·        Creditor Days

·        Inventory turnover days

·        Working capital ratio

Understand the difference between a budget and a cash flow forecast and you will be well on the way to managing your finances.

 

This information can be found on the Calxa website:   www.calxa.com.au

MYOB Cloud Tips

MYOB top five tips for cloud computing to empower  SME’s

1. Research trustworthy cloud service providers.  Important criteria when researching providers includes their credibility, technology and reputation.   Consider seeking advice from IT consultants, financial advisors and other business owners.
2. Review benefits and considerations of different cloud models.  You’ll discover cloud computing can take on many forms: some require you to learn new skills, others only work when you’re connected to the internet, and others also work in offline modes.  Focus on the benefits for your business and then determine the technology required.  E.G if you’re interested in the ability to have online, offline access to your data anytime, anywhere then cloud-enabled software solutions offer the best of both worlds; cloud, desktop or both.
3. Prioritise security.  The cloud involves accessing applications, information and data over the internet, via a third-party provider. Therefore their policies and procedures should be robust.  This includes physical security as well as firewalls, anti-virus, disaster recovery, auditing and testing.
4. Read the fine print.  Check on any hidden costs, add-on, features that will have additional costs.
5. Evaluate your own IT process and systems.  Each business is unique with varying budgets.  Evaluating your own IT process and systems is essential before migrating to the cloud.  E.G. will you require cloud access for all staff and for multiple devices such as computers, tablets and smartphones?  What areas of your business will truly benefit from incorporating the cloud?  A good provider will help you budget and plan for the future.  Take the time to map out a transition plan to help make the move to your chosen cloud solution smoother and easier.

Understanding The Cloud

What is the Cloud? (access this guide, go to Xero –Small Business Guides)

The cloud is where you put all your data, all your files and even your software so you can access if from any computer or device anytime, anywhere. Xero are tackling the tough questions about cloud computing so you can be prepared before moving your business to the cloud.

Isn’t cloud computing just the internet?  You use the internet to connect your device to the cloud, but the internet is just the connection – the cloud is where your data lives.

Isn’t it possible to lose your data in the cloud?  Your data is actually much safer in the cloud than on your computer.  Your computer can be stolen or corrupted quite easily, but cloud companies spend millions on systems and experts to protect your data.

Is ‘the cloud’ an Apple product?  Apple has a product called the iCloud, which uses cloud technology, but many other companies provide products in the cloud such as Google, Dropbox and Xero.

Aren’t you stuck if the internet goes down? These days the internet is like electricity, it’s very rare for it to go down and when it does you jut have to wait a short time for it to be available again.  In the meantime your data is safe in the cloud.

Isn’t cloud computing just a fad? The cloud has been around for years and it’s only getting bigger.  Internet banking started over 15 years ago.  Now the technology is so fast and cheap that it’s being used for everything.

Don’t I lose control of my data? You actually have much more control of your data, since you can access, share and work your info, anywhere, anytime on any device.  You also control who has access – which you can revoke in an instant.

Claiming self-improvement expenses or self-development courses

Expenditure on self-improvement or personal development courses is generally not allowable as a tax deduction. However, a deduction may be allowed to the extent that the expenditure is incurred in gaining or producing assessable income. That is, the course:

• Maintains or improves the specific skills or knowledge you require in your current employment; or
  
• Results in, or is likely to result in, an increase in your income from your current employment.

A deduction cannot be claimed for a course that does not have sufficient connection to your current employment, even though it:

• May generally be related to your employment; or
  
• Enables you to get new employment.

Where some modules of a longer course are considered income related, the Tax Office may allow a proportion of the cost of a course to be deductible.

Project management, leadership and mentoring staff are courses or module topics considered by the Tax Office to be classed as income related. Other topics such as communication, handling change and decision making are considered too general in scope to be classed as income related.

For more information, click here.

Small business access to free superannuation clearing house

Making superannuation contributions each quarter to several superannuation funds can be time consuming and may result in increased administrative costs.

The Government has set up the Small Business Superannuation Clearing House that allows employers with 19 or fewer employees access to a free superannuation clearing house to process payments of contributions into various superannuation funds nominated by employees.

Some key features of the service are:

• Employers make one secure electronic transaction which is then distributed to each of the superannuation funds nominated by employees;
  
• Each time contributions are made to employees, their preferences and details are already populated, so only contribution amounts need to be entered;
  
• Regular contribution amounts for an employee can be set up;
  
• Records of the employer's contribution history can be obtained when required; and
  
• The service is available 24 hours a day, seven days a week.

For more information on the Small Business Superannuation Clearing House, including how to register, click here.