As your local Xero accountants, we’re going to be talking all things open banking with Xero.
One of the best things about modern cloud accounting software is how easy it makes some once laborious processes.
Take bank reconciliation. Remember when you had to do it manually by matching hard copy bank statements with your invoices and receipts?
These days, direct bank feeds make the process far easier, and Xero has responded to new rules about direct bank feeds.
But, there’s a catch…
What’s a direct bank feed?
Firstly, if this is all news to you, it’s worth highlighting exactly what direct bank feeds are in accounting software and how they’ll benefit your business.
Accounting software like Xero can connect directly to bank accounts and receive a feed of your transactions. This means all of your debits and credits appear neatly within Xero and can be matched accordingly to their respective transactions.
That means no manual reconciling and zero need to upload a bank statement into your accounting software. Bliss.
Direct feeds: they’re now the law
There was a time when it was largely up to the banks and accounting software developers to get these feeds up and running. And this left us with a rather inconsistent bunch of compatible banks.
Some banks would play nicely, whereas others needed to be manually configured for a ‘one-time’ link.
Now, there’s a new law coming into effect that changes this; every bank needs to offer a direct feed for cloud accounting software. It’s known as Open Banking and is designed to put businesses back in control of their finances.
What is Xero doing?
The team behind Xero are having to replace some of their old bank feeds with new banking feeds that follow the Open Banking standard.
The new feeds will be made available periodically over the coming weeks and months. For instance, if you’re using a Barclays feed, or Yodlee for another feed, an update is probably on the way.
You can check the status of available live feeds on Xero’s dedicated website for Open Banking.
However, there’s a catch. This impacts everyone, whether you have a direct bank feed into Xero or not, because all live feeds will need to be set up again. What’s more, some of your existing banking rules might need to be reconfigured.
How to switch to new direct bank feeds in Xero
There’s no need to panic, thankfully.
Xero has put together a handy tutorial video for any users who need to switch to the new direct banking feeds.
There’s a couple of things to bear in mind, however:
- you’ll need your online banking credentials; and
- if you haven’t registered for online banking, you’ll need to do so before live banking will work.
Switching feeds is super-simple, but we appreciate you may need a bit of guidance – particularly if you sit in the camp of having done this previously some time ago.
Equally, if you have no idea where this leaves you with your Xero system, you’re not alone so don’t worry. Get in touch – we’d be happy to help.