Getting Started With Xero Direct Bank Feeds
For any businesses that have just joined Xero or may have been using it for a while, you've probably come across the task of having to update your bank feed. A lot of the banks in the UK require a 2-step authentication, commonly seen as a little keypad with HSBC or the PinSentry with Barclays. These can sometimes halt the ease of updating your bank in exchange for the security benefit but what if you could have both?
Xero has been working with the UK banks to get as many of them on board as possible, with Barclays recently joining the fold as well, joining the likes of HSBC, Natwest, Santander among others.
So what does this mean?
It enables you to automate the entire process. If you have to update your bank feeds, then you are connected to your bank via a 3rd Party called Yodlee. They link to your bank account and act as the conduit between your business bank account and your Xero data, transferring your transactions over every time you refresh the bank feeds.
With a Direct Bank Feed, this is removed and replaces Yodlee, so you have just the connection between your bank and Xero, no middle man to rely on and no need to update your bank feed every couple of days. If you find yourself logging in and having to refresh your bank feed or even worse, manually uploading your bank statements via .csv, then this is going to save you a lot of time.
So the main benefit we've touched on is time-saving, which for entrepreneurs, is like gold so we'll take it wherever we can get it. On top of the this, however, we can also be comfortable with the fact that it is direct with our bank account, so the data is 100% secure just like your online banking. There are no 3rd party's or any data that could go missing. It's your bank and Xero talking to each other.
The bank feeds are also updated every night without the refresh needed, so not only does it save time but every single time you log in, you'll have all the transactions from your bank up to the previous night. This is perfect for when you want to quickly check your cash flow position before making a big purchase or just to check your balance.
Lastly, by using the 3rd party feeds via Yodlee, mistakes can sometimes happen. The odd day, here or there, could be left behind and not brought into Xero, leaving discrepancies with your data and sometimes there are just "problems with your bank feed" and you aren't entirely sure why. Yodlee has certainly helped plug the gap while Xero has been setting up these Direct Feeds, but it's coming to the point where people are going to move on to the most reliable provider.
So where do I start?
You can check via the Xero Help Centre if your bank supports Direct Bank Feeds - most major banks are onboard, so the first step will be to see if yours is part of this list. If your bank isn't there, then keep an eye out as it soon might be.
Most of the applications to have the Direct Bank Feeds set up require a form to be filled out, signed and then scanned over to email@example.com. This can then take a couple of weeks to kick in and get started as the authorisation and checks between Xero, and your bank can take some time. Each bank is different however so you'll need to download the form for your bank and there is usually an ETA on how long to expect before they are fully working. You can find all of this on the Xero Help Centre.
It should be noted that at the moment, most banks do charge for this service. Usually, it's added to your Xero invoice, and some banks will charge it as a fee directly but again, each bank differs. The general cost seems to be around £3 per month, though, so it's a rather small cost when you weigh up the time saving plus the reliability of the feeds for your business.
Need more help?
If you are interested in Direct Bank Feeds or you aren't sure where to start then feel free to get in touch with us. We truly believe that Direct Bank Feeds are the future and that where possible, you should be using these instead. The reliability, as well as the ability to have your bank up to date within Xero, is excellent. Especially for such a small fee.
Feel free to reach out here, and we can let you know if your bank is compatible and help you get set up.
About the author
Ben Nacca is an accountant but is nothing like the stereotype you have visualised in your mind! He has worked in the accounting industry for almost a decade and is CEO here at Cone.
Ben loves travelling the world, playing video games and playing his acoustic guitar whenever he finds the time between spending time with his two chihuahuas, Hugo and Pablo!