In today’s digital world, tools like Xero have made managing business finances much easier. With direct bank feeds, your transactions automatically show up in your accounting software, saving you time and effort. But even though this technology is fantastic, it isn’t perfect. That’s why your accountant might still ask for copies of your physical bank statements.
Why bank statements are important
Technology is great when it works, but it can sometimes fail. Here are a few common issues that can happen with Xero bank feeds:
- Duplicated statement lines:
Sometimes, transactions get duplicated because of errors in data transmission. This can make your expenses or income look higher. - Missing transaction lines:
There might be times when some transactions don’t get imported into Xero. This can happen due to timing issues, delays in bank processing, or technical glitches. Missing these transactions can cause your financial records to be incomplete. - Feeds disconnect/reconnect and miss a period:
Occasionally, the bank feeds may disconnect and then reconnect, causing a gap in your transaction data. During this gap, any transactions that occurred might not be captured.
Need Help? DNA Accountants can assist
If you find any errors and can’t fix them yourself, don’t worry—DNA Accountants is here to help. Our team can quickly identify and resolve any discrepancies, ensuring your financial records are accurate and up-to-date. Let us take the stress out of your accounting, so you can focus on what you do best: running your business. Contact us today to see how we can support you!
How physical bank statements help
Despite these potential problems, physical bank statements are crucial for making sure your financial records are accurate and complete. Here’s how they help:
- Cross-checking data:
By comparing the transactions on your physical bank statements with those in Xero, your accountant can spot any differences. This ensures that all transactions are accurately recorded. - Making sure all business expenses are claimed:
Accurate records mean you can claim all your eligible business expenses. If transactions are missing due to bank feed errors, you might miss out on some expenses, leading to higher taxes. - Ensuring accurate financial statements:
Accurate financial records are essential for making smart business decisions. By verifying data in Xero against physical bank statements, your accountant can ensure your financial statements truly reflect your business’s financial health.
While Xero direct feeds are a fantastic tool for simplifying your accounting, they are not flawless. Issues like duplicated statement lines, missing transactions, and disconnected feeds can lead to mistakes in your financial records. Providing your accountant with physical bank statements allows them to cross-check and verify the data, ensuring all transactions are correctly recorded. This not only helps you claim all your business expenses but also ensures your financial statements are accurate.
Combining the convenience of modern accounting software with the dependability of traditional bank statements ensures you have accurate and complete financial records. This approach provides you with the best of both worlds, giving you peace of mind and confidence in your software.
Want to learn more about other year-end checks your accountant should be making – check out this blog.
