Many people have a love/hate relationship with the QuickBooks Online (QBO) Banking Feed. When used properly, it saves hours of time that you can use to take on more clients. But if you use it incorrectly, you’ll waste hours of time on cleanup.
Let’s take a look at common pitfalls so that you can avoid them and become a power user!
Overstated Income
If your reports show that your income is WAY higher than it’s supposed to be, it’s because you have been clicking Add next to the Deposits in your Banking Feed, instead of Matching them to existing Customer Payments and Sales Receipts.
Another red flag is a long list of old transactions in the +New > Bank Deposit screen and Undeposited Funds.
This happens because you’re clicking Add for the Deposits in the Banking Feed, instead of Matching them to existing Customer Payments and Sales Receipts.
An easy way to find these duplicated Deposits is to run a Profit & Loss Statement, then drill down into the dollar amount for your Income category. Look for the transaction type “Deposit.” That shows the money was coded directly to the income account instead of through a sales form.
To fix a duplicated Deposit, click on it to Edit. Check off the transactions in the top half of the window that should have made up that total. Then click the Trash Can at the far right of the lower section with the accidental entry to remove it.
The total Deposit remains the same, so it’s fine to do this even if the transaction has already been reconciled.
Make sure to join my webinar with Insightful Accountant, sponsored by Divvy, "Banking Feed: Troubleshooting and Reconciling" on September 8, 2020 at 12:00 p.m. Eastern Time. You can register here.
Incorrect Payee
A huge, inconvenient issue is that some banks use generic bank descriptions like “Check.” This causes Banking to autofill the Payee and Account with the most recent previous transaction. Don’t get fooled when you see an expense with the wrong Payee, or the wrong Account assigned.
Don’t Panic! It’s up to you to determine if these are correct or not. You will need to click on and edit most of the transactions until you get a feel for the patterns.
One Vendor, two types of Expenses
Sometimes one Payee might have two different types of transactions. For example, Intuit is my Payee for the Dues and Subscriptions for my QBO account. Intuit is also the Vendor for my QuickBooks Payments Merchant Services account. I have to keep an eye on each transaction to be sure it gets filed appropriately.
This is where the custom Bank Rules come into play. I created two Rules, based on the Bank Text AND the amount of the transaction.
In each Rule, select "All" of these conditions so that both the Bank Text and the dollar amount are taken into consideration.
Intuit transactions under $15 are categorized as Merchant
Service Fees. Intuit transactions over $15 are Software.
My Best Banking Feed Advice
To summarize, here are my best practices to ensure efficient and accurate data entry:
- Match all Income: Enter your Income using Sales Receipts and Invoice/Receive Payment to Undeposited Funds, then Deposit the money into the bank.
- Manually create all Customer-related or Product & Services purchases: Create expense transactions that get assigned to Customers, Classes, or Product purchases. Let those Match, too!
- Use Transfers: Any time money is moving between bank accounts and credit cards, use Transfer so that one transaction appears in both accounts.
- Create Rules: Automate as many routine transactions as possible to reduce your data entry time.
- Record other Expenses: Manually categorize any remaining overhead Expenses, especially if you have to enter in a memo.
Conclusion
I’m a huge fan of QBO’s Banking Center, and find it way more powerful than QuickBooks Desktop. If you’d like to join in my live conversation about these techniques, please join me for my upcoming webinar, "Banking Feed: Troubleshooting and Reconciling" sponsored by Divvy. I hope to see you there! Register here.