Clearing Out Banking Feeds
Segment One of two
In Part Eleven we looked at 'Setting up Banking Feeds' in QuickBooks Online and we discussed how much time they can save since they are far more robust than QuickBooks Desktop banking transactions. In this part of our series we will begin looking at the Banking Feed's artificial intelligence (AI), and how to use it for simple expense data entry. In the second segment on Clearing Out Banking Feeds we will look as some of the other options including looking at rules in details.
How the AI Works, and When it Doesn’t
How do you feel about QBO’s Banking? Your emotional reaction to QBO’s Banking Feed is directly proportional to your understanding of the artificial intelligence engine behind the scenes.
If your first reaction when looking at Banking is, “These are all wrong! This tool is terrible!” that tells me that some “techknowledgy” is in order. It’s not that the transactions are incorrect; the issue is that you haven’t started training the system…and it hasn’t yet trained you!
There’s a 6-step process behind the scenes that determines its classifications:
- Is there already an existing match for an unreconciled transaction for that dollar amount? Suggest it as a Match.
- Is there an open invoice or bill for that dollar amount? Suggest this transaction to close it.
- Does it meet the criterion in any of your Rules? Apply the Rule.
- Did you code a similar transaction in the past? Repeat it now.
- Has any other company categorized a similar Bank Detail? The AI suggests out of its database.
- If none of these steps trigger, the transaction is left as Uncategorized.
Alarm may set in when the AI gets to option 4, and you find yourself looking at a list of Deposits for the same client, or a dozen Checks made out to the same person.
As they reminded you in the Hitchhiker’s Guide to the Galaxy, “Don’t Panic!” There’s nothing actually wrong. The Banking Feed is waiting for you to click on each transaction and verify it. You are in control!
If your bank has generic descriptions like “Deposit” and “Check,” neither the bank nor QBO have the ability to know what those checks or deposits are for. They will always repeat the last occurrence.
You’re seeing suggestions that sometimes are exceedingly helpful, and other times are laughable.
And that is why YOU are the bookkeeper – you are the authority with the knowledge to utilize the technology. Here’s how.
Finding Matches
QBO looks for Unreconciled Transactions to match to your existing transactions. First it locates the dollar amount, and then it looks to the date.
If there’s no Match because the transaction was already reconciled, just Exclude it from the Feed (we’ll show you how in next week’s column).
- Any transactions that a business has already entered manually into QBO will be marked MATCH. This solid green MATCH box is your holy grail, verifying transactions were processed correctly.
- If it finds more than one potential match, the green box turns white and reports how many potential items there are. It will even try to match to open Invoices and Bills! Click on it and choose the proper matching transaction. Use the date to determine which transaction is correct. Whichever option you click on will update the text that shows in the row.
- For transactions that don’t match at all, your action depends on what type of entry it is. You may have to create Payments, Sales Receipts, or Deposits manually and then Match them. For these, the Banking Center is your hub telling you what you need to do.
If the transaction is a simple Expense, all you need to do is Edit and Add.
PEBCAK! Transactions that have to do with Customers, including deposits and purchases of Items from the Products and Services list, cannot be simply pulled in – make those Invoices, Deposits, Checks, Expenses, or Bill Payments manually, then Match them in the Bank Feed.
Simple Expenses
Transactions for overhead expenses can usually be added through this Banking interface. Here’s how:
Click on one to edit it.
AliciaP_Bank-feed_02_fig-01
If it’s a Vendor who your business will use frequently, enter them on the Payee line. Note that the Payee field says “(optional)”, but don’t be fooled! It’s not optional. If a Vendor name isn’t entered, the only way this transaction can be found is by finding it on a report. It won’t show anywhere in the Vendor Center.
If it’s a one-off expense or a Payee that you don’t want to accumulate in the Vendor list (like Restaurants or Gas stations), there are two choices:
- Create a “Miscellaneous” Vendor for never-to-be-repeated Payees
- Create a generic Payee like “Restaurant,” “Gas Station,” or “Parking” that can be used for all similar suppliers.
Next, enter the Expense category. Be sure to choose the right one, and be very sure not to leave it as Uncategorized Expense! When done, select Accept.
Item Purchases
If your client is buying a product that is on its Products and Services list, don’t just assign it to an Expense or COGS account inside the Banking Feed.
For proper sales reporting, including Item Profitability, the QBO Plus version has an option to include Item Details at the bottom of your Bills, Checks, or Expenses. That way you’re buying the actual Items.
This is particularly necessary for Inventory, but it even makes sense to categorize Subcontractors this way. You’ll be a hero by showing your clients their profitability by Contracted Services!
Wrapping-up today's article:
Using the Banking Feed as QBO’s hub gives you a clearinghouse for work to be done, speeds up your reconciliations, and reduces your data entry. It’s a win/win for everyone!
Would you like to see the Banking Center in action? My 2-hour Banking Feed & Reconciling class details how to make the most of the artificial intelligence used by Banking so you can take control of your feed. It even covers when NOT to use Banking! You can also check out my QBOA Tips and Tricks course or join my Mentorship Membership Program here.
In our next article, the second segment of “Clearing Out the Banking Feed” I’ll talk about how to manage Transfers, Deposits, and my favorite bank feed topic, Rules!
I also have an upcoming webinar co-sponsored by Insightful Accountant - QBO 101: Customers and A/R will be held TODAY, January 9th at 12:00 p.m. Eastern Time, you can register for this webinar here, or get more details at this website.