What is Automated Bookkeeping
Have you ever dreamed of being able to get rid of all your purchase invoices and receipts simply by scanning them and then having them uploaded to your accounts system automatically? With the advent of more and more cloud services and software as a service, the options available for having your bookkeeping done have changed. If you are using a cloud based accounts package, such as Xero, then it is well worth having a look at the automated bookkeeping services which link to it.
The number of these is increasing. Some of the possible options are listed below:-
- Receipt bank
- Invoice Smash
- Invitbox (closed to new subscriptions)
At One Accounting we were early adopters of this type of technology. We have been using Invitbox successfully since 2013. We initially looked at Receipt Bank in 2012, but we experienced quite a few issues with the data generated and stopped using the service. However, we returned to it in 2015, as there had been significant improvements in the service and have used it since.
We have tinkered with Datamolino which provides a similar service to Invitbox, but haven’t used it past an initial comparison and demo.
In most cases the services are using a combination of optical character recognition (OCR), extracting information from the embedded code within the invoice pdf, or manual input, before creating an input file which pulls the information through to your accounts package..
In order to help you choose which option, there are a number of questions which you should ask:-
- -How much detail do you want to see from the purchase invoice in your accounts package? For instance, Invitbox pulls through line item detail because it is reading the information form the code in the pdf. Receipt Bank only enters a generic description based on a default assigned to the supplier, so line item detail doesn’t appear in your accounts package.
- -If PDF’s require to be mapped so that the correct information can be extracted, how easy is it to do? Does the software provide this service or do you need to spend time doing it. Where the software extracts information from the pdf, there is usually an initial set up for the data extraction. As invoice formats can vary from supplier to supplier, this may be on a supplier basis. The mapping tell s the software which fields to extract, for example invoice number, date, total, etc. It is important to know who has to do this initial mapping – you or the software provider.
- -What turnaround time do you need? If the provider undertakes the mapping mentioned above, how long does it take. If they are processing using OCR / manual input, how long before you get your transactions back.
- -Costs. These are generally based on a volume of invoices / receipts processed. Check how you will be billed if you go over your allotted allocation. Also worth checking is how many users you are allowed. There may be an additional cost if you need more than one.
Why Use Automated Bookkeeping?
The benefit you get from using this type of service is a more manageable bookkeeping routine. In our experience, many business owners use a family member or outside bookkeeper to undertake their transaction processing. Quality is often variable depending on the experience of the individual! If they use an accountancy firm, perhaps the turnaround times are slower than they hoped – possibly quarterly in time for vat returns, or more regularly if agreed.
However, times are changing. Now, by using an app such as Receipt Bank the whole process can be streamlined, meaning that you have more up to date information for running your business and takes less effort to get there. However, do have realistic expectations about it being “fully automated” as it will more than likely still need some intervention from someone who knows what they are doing. An added benefit is that you may be able to cut down the amount of paper you have. Many of the services will drop an image of the original document into your accounts package and attach it to the transaction, so you can get rid of your boxes of paper once they have been processed.
If you still want to use a family member to do some of the work, then great, but now it may mean scanning a batch of invoices rather than entering them into your accounts package. If you have a bookkeeper you can put them to work on other tasks due to the time saved. Why not get them to do a bit (more) credit control?
If you are working in conjunction with your accountant, then they can still provide quality control to make sure invoices are being processed to the correct categories and that vat is being correctly treated, but they shouldn’t have to hassle you to get the bookkeeping up to date for vat returns any longer.
What Are Its Limitations ?
As we don’t use all of the packages mentioned above, I have chosen Receipt Bank (and Xero as the accounts package) to illustrate what can be done, but also to point out some of the limitations.
What type of invoices / receipts will it deal with?
Pretty much anything. We have found it ideal for food and drink clients where there may be lots of hand written receipts or receipts from cash and carrys etc, which aren’t dealt with by some of the systems that require pdf’s.
How does the information get into Receipt Bank?
There are a number of ways – scan the documents and upload via desktop, email them or take a photo using the mobile app. So you are in control of how much you want to do yourself. Some clients drop off their invoices to us because there is quite a large volume and they don’t have a decent scanner, so we scan and upload. Others use a combination of the mobile app and email to upload the invoices themselves.
What happens once the invoice / receipt has been uploaded?
The transactions are processed and are classified as “not ready for export” or “ready for export”. Where they aren’t ready for export, there will be a note saying why – for instance the total may not be clear. Some manual intervention is necessary at this point to clear the transaction for export.
Before exporting the transactions it is worth having a quick review. At the implementation stage of Receipt Bank, supplier rules can be set up to specify the category (Xero account) that the transaction will be posted to. It also gives the generic description that will be used as well as a default vat rate and whether the transaction is a purchase / expense claim / bank payment. The defaults can be amended before the data is imported into Xero, for instance if the Vat code is different from the default.
Once the anomalies have been fixed and the checks done, the transactions can be published into Xero.
What should I watch out for?
Getting the set up in Receipt Bank correct from the outset will make the whole process easier and will require less intervention. So setting up default supplier categories, due dates, and descriptions will all help streamline the process later. There are also global options to choose from – do you want purchases to flow through into Xero as draft, awaiting approval or awaiting payment for instance.
Receipt Bank is limited in being able to automate the line item detail from the purchases. If you want to see all the detail in Xero, then Receipt Bank may not be the best option, as it only pulls through the default description from the supplier, unless you want to override it (but then you are back to having to spend more time making the changes). For line by line entry we use Invitbox. We have found that Receipt Bank is great for businesses which do not require a lot of line item detail – food and drink businesses for instance.