Using QuickBooks Bank Feeds & Avoiding 3 Common Mistakes

Posted on February 20th, 2018

If you haven’t experienced the ease of recording transactions using QuickBooks’ Bank Feed function, jump on the bandwagon! Bank Feeds automatically import transactions directly from your financial institution to QuickBooks Desktop or QuickBooks Online. According to Intuit, there are over 1,400 financial institutions across the US and Canada whose online banking services integrate with QuickBooks, so there’s no excuse not to sync QuickBooks with your bank account. Welcome to the thrilling world of Bank Feeds!

Using Bank Feeds

Once you’ve connected your online banking to QuickBooks, you are ready to import transactions! All it takes is one click of a button (plus your bank password)!

Downloading Bank Transactions

As it imports your bank data, QuickBooks automatically classifies certain transactions using Rules. Rules use the information contained in each bank transaction (usually the merchant name) to fill in the vendor name and account in QuickBooks.

Bank Feed Rules

The first time you use Bank Feeds, you won’t have any Rules established, so you will have to enter all this information yourself. When you’re done, QuickBooks will ask you if you want to add Rules for the transactions you’ve approved; once the Rules are created, they’ll be used to recognize and classify similar transactions going forward. This tool has drastically improved efficiency for accountants and small business owners, leaving them more time to take care of other important business functions.

Common Errors

Although the Bank Feed function can save you hours when used correctly, it can cost you more time in the long run if you make the following common mistakes:

1. Recording All Transactions through the Bank Feed

The first big mistake that people make when using Bank Feeds is not recording certain transactions outside of the feed. (Take a look at our blog Best Practices: Recording Transactions in QuickBooks for more detail on the transactions that should be recorded manually.) Once you download your transactions into the Bank Feed, the transactions you’ve manually entered will be marked “Match,” meaning the Bank Feed matched the transaction you imported with the transaction already in QuickBooks! This adds an extra layer of assurance that your transactions have been entered correctly.

2. Neglecting to Review Bank Feed Rules

Relying too heavily on the Bank Feed Rules can lead to misclassification of your transactions. Rules is a great feature that eliminates data entry for many reoccurring transactions, but that doesn’t mean you should blindly trust it. Each time you use the Bank Feed, scan the list of transactions that have been classified using Rules to ensure the vendor and account information has populated correctly.

3. Adding Duplicate Rules

QuickBooks Desktop asks you if you want to create a new Rule for each transaction you accept that doesn’t match any existing Rule definitions. It is very easy to click “Okay” without actually reviewing the Rules you just created. If you navigate to the Rules list (in the top left corner of the Bank Feed window) you will often find multiple Rules for the same vendor! For example, a transaction from Chipotle will be imported from your bank with the store number in the merchant name. It will create a new Rule for EACH new Chipotle store you eat at.

Duplicate Bank Feed Rules

Duplicate Rules may not seem like a huge deal, but result is that you’re manually recording far more transactions than you need to. You can avoid this by editing the Rule and removing the additional information (the store number, in this case) that would prevent it from matching a transaction made at a different Chipotle store.

Editing Bank Feed Rules

You should always review Rules before you accept them. It’s also a good habit to periodically review your Rules list for duplicates you missed previously.

QuickBooks’ Bank Feed feature is one of the many ways that a solid accounting system can make your life easier. If you’re not using Bank Feeds yet, what are you waiting for?

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