Check 'Unreliable' Bank Feeds in Xero, Saasu: Bookkeepers

  • Duplicate or missing transactions in bank feeds
  • CBA, Bendigo Bank have more issues than other banks
  • BAS agents still manually checking balances

One Friday morning BAS agent Louise McLoughlin sat down to reconcile a client’s bank accounts at the Commonwealth Bank (CBA) on Saasu, a cloud accounting program. The job should have taken under an hour.

But only two of the nine accounts, which had been updated by automated bank feeds, matched the balances in the client’s online banking screen.

“The other seven were all wrong. Very wrong. We’re talking thousands of dollars,” said McLoughlin of eBas Accounts, who had to go back through weeks of transactions. “I said to my client, I’m really sorry but here’s a bill for six hours, and he fell off his chair. He wasn’t happy.”

McLoughlin had a similar experience with Xero bank feeds with Westpac and Bendigo Bank accounts and further issues with feeds in Saasu. “Bank feeds just stop for days on end. Until you put your bank credentials in again it won’t start, and then when you do it dumps days of information in there,” McLoughlin said.

“It’s not good enough. It doesn’t make me look good but it’s not my fault and it’s not the client’s fault either.”

Bank feeds have been hailed as one of the great productivity benefits of online accounting software. However, ongoing issues with their reliability have caused some bookkeepers to view automatically imported transactions as a first draft rather than the complete statement.

Xero in particular has highlighted bank feeds as a key selling point for its cloud accounting software. The company denied it was overselling their reliability.

“We’re not trying to oversell the bank feed and say it’s a statement replacement. There’s no doubt that from time to time we get issues with bank feeds,” Chris Ridd, Xero’s managing director in Australia, said.

Issues with feeds were isolated incidents, Ridd said. Problems with the CBA occurred when it changed its banking platform but not all customers were affected.

Other bookkeepers contacted by BoxFreeIT said bank feeds were occasionally unreliable but had seen only a handful of issues. Despite the convenience of bank feeds, professional bookkeepers using Xero and Saasu continued to check imported transactions against statements.

BAS agent Kylie Short from Tilda Virtual found a new Xero client had overstated expenses over two months with their St George accounts due to doubled transactions. Short unreconciled the accounts and redid it with a paper statement to find the extra transactions.

“The only way I would have found it is because I’m still old school about bank recs. I don’t believe in just ticking the green boxes” in Xero’s reconciliation screen, Short said. “There still needs to be some verification that what you’re doing is correct.”

However, Short was unconcerned about faulty feeds. “I’m not really worried because I’ll always pick it up. If it was across the board and everyone was doubling up then I would stand up,” Short said.

“Generally I think bank feeds are the bomb. They’ve stripped out a lot of the monkey work,” said Kim Sargeson, a BAS agent at iBas Accounting Solutions.

Sargeson, who has several clients on Saasu for the past year, has only had two issues with a bank feed in four months, both with the CBA. She called the CBA to discuss the problem but was “handballed around” between departments.

Sargeson rang Saasu’s support team who looked up the transaction date and asked her to call back immediately if it happened again. “Saasu were awesome,” she said.

Sargeson also checked reconciled accounts in Saasu manually for all clients by printing off a statement directly from the bank or using a paper statement sent by the client.

“If someone who hasn’t got those skills and practices, and puts all their trust into a bank feed, then I think it may cause problems,” Sargeson said. “It’s concerning that small businesses trust the product (accounting software) and the bank feeds” for their reconciliation.

Xero’s Ridd said bank feeds were reliable enough that checking with a source document was unnecessary.

“I’d never be sitting here saying you should do the bank reconciliation in the system and have a physical statement next to you – it defeats the purpose,” Ridd said. “What we have today works in the vast majority of places and is best practice. It’s usually pretty clear when things aren’t working and then we’re straight onto it, working with the bank in parallel and telling our customers of the situation.”

Xero has three full-time developers creating and repairing feeds and a dedicated team in the customer support responding to issues with existing feeds.

But it was unclear whether Xero could know if a feed supplied by financial data aggregator Yodlee had broken until Xero users complained to the support desk. Xero and Saasu used Yodlee to connect to banks with which they hadn’t arranged direct feeds.

Despite keeping contact with the banks, platform upgrades had could occurred without any notification, Ridd said.

“Banks normally advise us if something is causing an issue. There have been situations where a bank has upgraded its core banking platform and it caused the feeds to break. That was unforeseen by us,” Ridd said.

Experiences appeared to differ by bank. McLoughlin received a message from Saasu warning her that a feed from Bank of Melbourne had stopped. However, Westpac and the CBA didn’t send any warnings to the client or the bookkeeper.


Reliability not guaranteed

Bank feeds that were identical copies of bank statements were unlikely to appear soon, based on discussions with accounting software companies.

Even where accounting software vendors had direct feeds from banks they would never cover every product, Lehmann said.

“In the case of the CBA they have three sites, NetBank, CommSec and CommBiz. They have three forms of authentication, password, token and SMS. And they have probably a hundred-plus banking products when you include loans, accounts and credit cards,” said Marc Lehmann, CEO of cloud accounting Saasu.

“Supporting the CBA itself is a huge job. You’re just going to get failures in connection,” Lehmann said. The break in the feed could have been caused by the software company, the bank or the feed aggregator, Yodlee.

“Some of these things get fixed quickly and others take a week or two. But it’s often the nature of the beast. No-one could be 100 percent reliable,” Lehmann said. When a feed broke the cloud accounting software would “catch up” with the stream of transactions when it reconnected, though sometimes this was an imperfect process.

Bank feeds were still a boon for productivity for micro-businesses that created accounts from their data, Lehmann said. “But they do run the risk of missing stuff and that does happen,” he said.

Larger companies with 50 staff or more didn’t use the feeds because of the complexity of payables and receivables, Lehmann added. “More than half our customers don’t use bank feeds. It’s not a Holy Grail, it’s only for the tiniest businesses that want (the program) to do their BAS for them.”

Image credit: Xero


  1. says

    If anyone thinks that automated bank feeds are ever going to be 100% reliable and accurate to the extent that they eliminate the need for review and or adjustments for anyone other than the simplest micro business…they are delusional.

    • says

      Hi John I’d hope that the banks would eventually move to platforms where bank feeds could replace statements. It shouldn’t make a difference whether the bank hits Print and mails you a statement or Send and sends you the feed.
      One day. Unfortunately bank feeds are not as sexy as mobile apps eg. Kaching.

    • says

      John – I think the notion that we accept them as unreliable is delusional. If the service is provided then it should be reliable – end of story…

      Banking needs to move their platforms out of the 80’s and get with the commercial reality of cloud based services – the cause may well be the institutions but accepting that as ok is clearly not what the consumer should do..

      Speak you mind and people will listen..

      • says

        Rich, perhaps I need to expand on my comment to make my view clearer.

        I think there’s a misalignment between vendors marketing claims around the benefits of bank feeds and reality. They over promise (if only by implication) yet under deliver in terms of utility. Let me hasten to add that none of my comments are directed at any particular vendor or financial institution – the problem is generic and relates to workflows, data accuracy and probabilities.

        Bank statements (paper or online) are a record of what the bank thinks is a full and correct list of transactions for a period at a point in time. Generally they are very reliable but again, not 100%. There have been cases of banks systems incorrectly charging account fees or interest charges and statements have needed to be reissued. Sometimes banks have detected this and advised their clients accordingly. In other cases, the client finds the discrepancy and notifies the bank. The primary purpose of statements is to provide a record of account and a method of reconciliation between the business’s accounts and those at the bank (or credit card issuer etc.) The underlying workflow is that individual transactions, pay a bill, cut a cheque, receive a payment, record a cash deposit etc. are first entered manually in the accounting system and allocated appropriately by someone who knows what they are doing. Yes there is room for human error and it can be time consuming. Statements can then be used to reconcile at a high level (they don’t help with expense allocations etc.).

        Bank feeds are different in the sense that over and above this, even assuming that the data (ie: list of all transactions) is the same, they are data feeds intended to automatically (semi or otherwise) update records in the accounting system. The various accounting software vendors are tackling a very hard problem (both technically and conceptually). They generally provide mechanisms to approve/reject or re-allocate individual transactions and in some cases have rule based “learning” capability which aims to improve the accuracy of allocations. There is still room for human error here over and above errors in the data feeds.

        Additionally, not all “apparently” duplicate transactions are incorrect. It depends on the granularity of data. Without timestamps (other than just dates) and unique transaction IDs being visible to the end user it is not determinate. A simple example is a driver who buys $50 worth of fuel from the same place both in the morning and at the end of a shift on the same day. This may look like a duplicate at first glance but in fact is not.

        Then there is the case of real but fraudulent transactions. The statement is correct, the bank feed is correct but the transaction is a result of fraud or a breach of security of the online bank account. I know of cases where that has occurred. The issue may only come to light and be resolved as a result of a system of checks and balances based upon an individual conducting some form of reconciliation and/or examination of odd or unusual transactions.

        So, in conclusion, I think bank feeds are generally a good thing and can be a time saver. That said, I’m probably of the view that transactions should be initiated in the accounting system (ie: write/record a check) rather than entered after the event via feeds.

        I think the best advice is to follow what various bookkeepers/accountants have said in this thread – in essence – don’t expect bank feeds to be a “silver bullet” that eliminates the need for checks and balances and human intervention. So, perhaps “delusional” is a bit harsh but my view remains that those who think they are a magic silver bullet are at best naive or have unrealistic expectations.

        • says

          Thanks John. I still think that business owners, particularly those new to accounting software, will assume that feeds are a silver bullet. I see them saying: After all, they’re called “bank feeds” so aren’t they the exact list of transactions sent from the bank?

          I don’t think the software companies are explaining that the feeds are 100% accurate. Most businesses would assume their paper statements are accurate too – the banks should have an obligation to tell their customers to check them.
          I believe that obligation passes to the software companies when they start delivering bank feeds.

  2. Liam Smith says

    I know this site focuses on cloud, but it’s interesting to compare this type of reliability issues with Banklink’s feeds and current market positioning / marketing.

    • says

      Yes – I’ll give Banklink a call to find out their reliability. From my research for this article, I don’t think it’s possible to cover every product in every bank, even for Banklink.

  3. says

    Thanks for this post Sholto & for the reference to our website (much appreciated). Your post covers all of the issues we talked about in your interview – it’s very well written – well done. I’ve just read the whole thing and I have to say that this comment by Xero’s Chris Ridd really concerns me: “Xero’s Ridd said bank feeds were reliable enough that checking with a source document was unnecessary”. In my opinion it never enough to just trust the bank feed – a physical bank reconciliation via an actual bank statement that shows the true closing balance for a particular period, is paramount. How can he say this isn’t necessary? Obviously he isn’t and has never been a bookkeeper! Any bookkeeper worth their salt will check each and every bank feed reconciliation via the actual bank statement – if they don’t they aren’t doing their job properly. Unfortunately, with the current state of play, you cannot trust bank feeds – there are just too many things that can go wrong. Businesses using cloud accounting software who are not using a bookkeeper to check their files, need to be warned: a bank feed rec should only be treated as a draft because it can contain errors, missed transactions, duplicated transactions etc. Unless you get this checked by a certified bookkeeper, you can never be sure that your accounts figures are correct! If I were asked if I had anything to say to Chris Ridd about his comments, I’d just simply say: “Tell him he’s dreaming!”

    • says

      Thanks Louise for the tip! I have to say that I was totally surprised when I first heard that bank feeds were not 100% reliable. I assumed that because they were directly from the bank they would be the same as a statement. I think that many other businesses have made the same assumption too – because you want to believe it.
      It will be interesting to see whether Xero clarifies its position. I’m hoping Wayne Schmidt will make a comment as Xero’s main contact for Australian bookkeepers.

    • Chris Ridd says

      Hi Louise, Sholto.
      To clarify, printing off statements and doing an additional reconciliation manually is overkill. It is certainly good practice however to check your balances regularly. Note that when there are issues with bank feeds they can often be picked up and clients advised. Some such as doubling up of data are hidden because the privacy of the data is respected.

  4. says

    Bank Feeds are not 100% accurate.

    Neither are reconciliations undertaken in other systems using manual bank statements.

    Both are subject to errors and that’s the reason we have checks and balances in place. Whats the old adage – if something is that simple that any fool could use it, then only a fool would. As with everything we do with bookkeeping, we should always verify our results. All my clients provide me with a bank statement extract for each work period (monthly or quarterly) so that I can confirm the bank balance, and I know that accountants are still asking for bank statements showing balance as at 30 Jun as part of their work papers (yes – even using cloud based work papers!)

    Products such as Xero allow issues with bank transactions to be picked up and corrected far sooner in the process. I’ve seen data files with years of bank statements that have never been reconciled, and transactions that are all over the place. Takes forever and a day to resolve, because you are still working with manual data.

    I’ve had (on the extremely rare occasion) bank feed data that is incorrect. Because its being looked at on a daily basis, the problem is easily identifiable and resolved.

    A good bookkeeper or accountant should have checks and balances in place to validate and verify data.

    Whilst it would be utopian to think that we could do all this without having to validate data and that banks were 100% reliable (thinking here about BOQ who have just advised clients that interest has been calculated incorrectly on a large number of mortgage accounts), that’s not the case.

    Don’t use the rare occurrences of bank feed errors dissuade you from using products that use live bank feeds. That’s going to be like throwing the baby out with the bathwater. Instead, recognise that the live bank feeds are an evolution in our industry, and one where we hope that the data coming from the banks will improve over time, and with continued pressure on them from their client base.

    The benefits of working with live bank feeds vs working with manual input of data far outweigh anomalies that occur. If you have good processes for checking and validation of data in place, they are easily managed.

    • says

      Hi Cass, thanks for commenting.

      Bank feeds are here to stay, I’m sure. Though it’s hard to get a handle on how common errors are. My issue is that bank feeds are promoted as a reliable source of information when they occasionally have issues. I think the software companies need to include a tip in their demos or user guides to check balances and why this is the case. Better to address and manage the problem upfront.

  5. says

    We see bank feeds as another tool in maintaining our Client’s financial records, however it does not replace the need to confirm the bank balance at regular intervals.

    My practice is about to introduce Fifo as our working paper files, providing our Clients and their Tax Agent with access for their information for review.

    These files will include the bank statements at the end of the relevant reporting period and the completed bank reconciliation.

    Bank reconciliations are the basis from which all other financial reports can be generated with integrity.

  6. says

    I have never understood all the recent buzz about bank feeds, as if it were something new (Banklink have been doing this with accountants for over 25 years!). I have had concerns re Xero and others about the potential security/liability risk to clients who are willing to give up account login details – and it’s hardly surprising that screen-scraping is not going to be reliable. From my personal experience as a public practice accountant, bank feeds can be an invaluable tool for both clients and bookkeepers/accountants when you are using a tried and trusted provided. I have around 60 clients on the Banklink service for the last 4 years or so and have never had a single issue with duplicate entries, missing data or anything else of the sort. I expect that the other providers will get there in time, but I sure don’t have time to ride out the bumps in the road along the way until they do. Banklink is always my first recommendation if it’s a suitable option for the client.

  7. Aren Shaw says

    There is a very big difference between Bank Feeds, and Screen Scraping. Xero is most definately using screen scraping given their connection with Yodlee. Not only does this contravene many parts of the EFT Code of Conduct, it will also prove unreliable.
    The true players in this space have done the ground work and have established true Direct Feeds with the banks (not back doors through Internet Banking), which are exponentially more reliable,

    • says

      Hi Aren thanks for the comment. Xero does use Yodlee but it also has established direct feeds from seven banks including the big four. The reliability issues aren’t limited to Yodlee feeds, though, as bookkeepers in the story were having issues with CBA and Westpac.
      I’m working on an update for next week on rival players.

  8. says

    This is a great thread thank you for sharing. Part of the best practice in Xero is to undertake a bank reconciliation report either when the paper statements arrive or at least at each month end. This Bank reconciliation report has 3 default parts, firstly the bank reconciliation so clients can ascertain the Bank balance compared with the Xero ledger balance, the next tab is the Bank Statement which will mirror the actual bank statement in addition to any “extras” the end user may have added, the third tab is is the Statement Exceptions that reports on any potential out of the ordinary transactions such as duplicate statement lines, manually entered transactions in a bank feed account. This overall report is clear and covers off any exceptions that may have occurred owing to bank issues and or data entry error. When training we always make a point of drumming in the importance and benefit of this report. We ask that the report is “published” to take a snap shot of the data so we always have a record. Today in New Zealand we received an obvious orange box stating that CBA bak feed imports had an issue, which shows the true global nature of Xero. At the end of the day Xero is our accounting engine which relies on human data entry and baks to feed accurate data. That said we encourage you all to compete the bank reconciliation report to ensure all end of month checks and balances are accurate.

  9. says

    Melanie Morris – thankyou for your great comments – I have the same process in place within my practice. I train each and every client to handle the bank reconciliation via those checks and balances and most importantly publish the report so you have a snapshot of what was done at that date and time. I really like Bank feeds and the time they saves client’s is amasing! When comparing the bank feed option to human error in a manual bank reconcilation I would much prefer the Bank Feed option. No system is perfect and nothing is 100% secure… this is a feature that is here to stay and more and more SME’s are coming on board with Cloud Accounting products simply because of the time/cost saving feature that the Bank Feed option brings. I believe the balance between technology and having good internal checking systems is a nice balance and is working well within the business’ that I am working with.

  10. says

    Hey Sholto … love that you produce ‘stimulating’ threads
    High 5 to the practices with process in place, regardless of software, pencil, rubber or fairy dust, DO your cross checking. As MP & MM mentioned – use the Cash Reports in Xero or simply cross check the statement balances – no big drama, just do your bookie job. So looking forward to the day when we pay bills and file GST returns directly from Xero … (now that will put cross checking to the ultimate test!)

    Have a great weekend

  11. Josh Wilson says

    In the last section Reliability Not Gauranteed it quotes Lehmann but I can’t find within the article who Lehmann is and what their credentials are to be making statements like that.

  12. says

    Thanks for the comment. I’ve been thinking about what the cloud accounting companies could do to fix this situation. Rather than trying to make sure every feed is correct, if they first installed a flag system that alerted users that a feed had issues it would be a great start.

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