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Beyond the balance sheet

Online accounting software & bank feeds – check the terms & conditions

Joe Lennon 27/11/2014 3 minute read

Joe Lennon FCCA on the need to check the T&Cs of your business bank account before incorporating an online accounting software bank feed.

Integrating online accounting software with your bank account through bank feeds is now a service feature of many providers. Some tend to make use of a third party (usually in the form of the American company Yodlee) by obtaining read only access to your bank account to make it work. It's something you should investigate prior to making a purchase decision.

Use of third parties can of course create all sorts of concerns among users regarding security. Whilst Yodlee appear to have these bases well covered, it seems that as with all tech advances and changes, there is a reliance on all parties concerned to react and co-operate. In this particular case that means the banks and the nature of the account they hold with you as their customer.

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The issue – your banks terms and conditions

Let's just take a step back. Before we delve into the details, it’s always good to recall the basics of what we're talking about and how it works. Accounting software can now update your accounts in real time and reconcile to your bank statements through bank feeds that upload your business banking transactions as they happen.

To date this has tended to happen via use of the third party company Yodlee. The key point here is “third party”. You see allowing a third party to access your bank account, albeit read only access, is a big deal to your bank and to our knowledge some haven’t yet amended (or are in the process of amending) their T&Cs to cater for this.

The result is it can lead to the kind of scenario you see in the comment below which was in response to software provider KashFlow announcing the arrival (just over two months ago) of bank feeds as part of their service.

Bank feeds issue with Natwest and KashFlow

If you already have a business bank account, and we expect you do, then the question is do they allow third party access so as to incorporate the bank feed feature?

The banks are responding

The good news is that some banks have recognised this issue and have responded by either altering their T&Cs accordingly or working with software providers to deliver a direct feed themselves. Which banks we hear you ask? Those that we are aware of who have done this include:

  • Barclays
  • Lloyds
  • HSBC, Royal Bank of Scotland and Natwest (operate direct bank feeds)

How online accounting software and bank feeds work

Direct feeds aren’t as easy to set up

Banks offering their own feeds with software suppliers may on the face of it seem preferable however, that isn’t actually the case. You see unlike Yodlee, HSBC for example takes a number of weeks to set up. The process is also more arduous for you as a customer. HSBC doesn’t compile specific screenshots of customer bank transactions as Yodlee does. Instead the bank sends you all this information and relies on you the customer, to micro-manage much of the installation period. This requires a significant amount of your time and input meaning it’s not yet as efficient or convenient as Yodlee's proecesses.

What you need to check

If you’re already using accounting software and incorporating bank feeds (as in the comment example from the Kashflow blog) or looking to incorporate then we suggest you do the following:

  • Find out if your bank do direct feeds and with which software suppliers. Are the suppliers they do this with the right fit for you?
  • If they don’t do direct feeds then check the T&Cs of your account carefully for allowing read only access to a 3rd party supplier such as Yodlee
  • Contact your bank and discuss this if they don’t allow 3rd party access, you’re not  sure from the T&Cs, or you have more questions

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The content of this post is up to date and relevant as at 27/11/2014.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.

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