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How to Keep Your Business Bank Account and Your Accounting System in Sync

14. January 2019 / in technology

Accounting is one of those rather unloved tasks in the realm of self-employment. Collecting, sorting and filing receipts are a cumbersome duty that has to be done at least once a month. Whether a freelancer, start-up or small entrepreneur – hardly any self-employed person looks forward to completing their accounting tasks.

One of the underlying reasons for this could be that there is nothing to gain in accounting, but there is a lot to lose. Those that do their jobs properly look forward to ticking off this task on their monthly statement. However, those that disregard the principles of proper accounting will soon find themselves in trouble with the tax authorities – in fact, such individuals could be in for an uncomfortable ride.

The desire to automate standardised processes is proliferating in all business areas. The way to achieve this is through smarter processing of data. Read our new White Paper to find out what the financial world is doing with Smart Data Analytics (in German). Go to White Paper.

In short, everything has to be in order. Here are some of the principles of proper accounting:

  • Principle of completeness: All transactions that have an influence on determining profits must be completely traceable. In the case of a tax audit, this point is often the sticking point.
  • Principle of accuracy and freedom from arbitrariness: All transactions must have taken place within the scope of the business transaction. For example, self-employed individuals should refrain from producing high costs that do not appear to be plausible.
  • Principle of clarity and comprehensibility: All transactions must be comprehensible for the tax office without the need for additional explanation. The tax office has clear expectations of how the accounting is to be documented.
  • Principle of regularity: All transactions must be arranged and documented in a timely and chronological manner. In addition, there must be evidence for each transaction – don’t book anything without getting a receipt!

In light of these requirements, the experiences of self-employed people show that accounting is not a sure-fire success. Freelancers and business people invest valuable time month after month in performing accounting tasks – time that most entrepreneurs should actually invest in value-adding tasks such as product development, marketing or customer care.

Automate Accounting Based on Account Transactions

The time required for proper accounting is considerable. On average, those that are self-employed invest at least one full working day per month in keeping their books. One of the most cumbersome tasks is the reconciliation of accounting transactions with business account transactions.

Accounting systems and business bank accounts must always be consistent, but manually reconciling them can be a very arduous process. A major step towards simplification and automation is provided by software vendors such as Billomat, BuchhaltungsButler, Debitoor, Lexoffice or sevDesk, which can all be linked to your business bank account.

Not only are payments and receipts automatically reconciled, freelancers and small entrepreneurs can also easily keep track of their banking and accounting data – so far the theory. Software providers usually use the infrastructure of Account Information Service Providers (AISP) to exchange data between business accounts and accounting systems. In reality, however, the self-employed do have to accept that there are some disadvantages to this.

Providers certified in accordance with PSD2 ensure data reconciliation via XS2A, but in some cases, users of the accounting software must also register with the AISP and agree to data exchange via a third-party user interface. This disruption to the user journey not only complicates the process from the user’s perspective, it also diminishes the overall integrated experience that the software providers promise their users.

When AISPs and Account Apps Make Common Cause

The idea of automating accounting tasks such as account reconciliation is self-explanatory: A considerable part of the accounting process takes up a lot of time on the one hand, but on the other hand, it is largely a matter of highly standardised tasks. The need to digitalise and automate these tasks goes without saying. In the end, the manual effort required for sorting and assigning receipts and bank transactions would be largely eliminated.

1. AISPs und Account-Apps

However, the potential for the integration of business accounts and accounting systems only comes to the surface when software vendors are able to take full advantage of the strengths of the AISP infrastructure and create a clean integration between software and bank account. This depends, amongst other things, on the following criteria:

  • Clean integration: To ensure a stringent user experience that only takes place within the accounting software, AISP integration should not be visible to the user at all and should take place completely in the background.
  • One-off registration: A seamless user experience also demands that users do not have to register with the AISP to integrate their account and software. An additional registration is insecure and wastes valuable time.
  • Ready for international use: Software providers that want to offer their solutions outside Germany should rely on an AISP that is active across the globe. There are hundreds of banks in Europe alone to which an AISP must provide interfaces.
  • Automated reconciliation: In order to make data reconciliation between account and software as efficient as possible, the AISP should offer the possibility of reconciling delta revenues. This way, only new transactions since the last reconciliation are synchronised in real time.

If the user experience is right in the end, the self-employed can reap the benefits of enormous time savings. What’s more, potential sources of error are reduced to a minimum because AISP integration with the accounting software takes over most of the tasks. Manual steps, which are the biggest source of errors in accounting, are also reduced to a minimum.

Are you interested in digital, automated and intelligent accounting based on AISP infrastructure? Talk to us! We are just at the beginning of a very exciting development and are looking forward to hearing your good ideas, feedback and comments. Contact us now!

Schlagworte: technology

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