9a. The Bank Feed

The bank feed is one of QBO’s main time-saving features, and if you’re just getting started with your nonprofit and DIYing your books, saving time is probably high on your list of priorities! Before we get into the details of the bank feed, there are a few things you should know. The bank feed can save you a lot of time if you use it correctly, but it can also cause errors and inaccurate books if you go in without a clear understanding of how it functions. Having a solid understanding of the manual transaction entries covered in the previous sections will help you know when it makes sense to use the bank feed for certain entries and when it doesn’t. 

In this section of the guide, we’ll first go over what the bank feed is and its intended purpose, the types of transactions and how they do or do not interact with the bank feed, and how to navigate the bank feed. Then in the next section we’ll go over how to actually enter each of the transactions and how to set up Rules in the bank feed which can be a real time-saver for recurring transactions.

A quick note on QBO’s user interface

QBO has a tendency to make changes to their user interface. For the most part, in recent changes, functionality has remained the same. Most of the changes have been related to the navigation menu.

One exception to this is the bank feed page, which is in the process of switching over to a new page design as of this writing. Some users are still seeing the old bank feed page, while others are seeing the new bank feed page. This guide is written for the new user-interface, because all users will eventually be switched over to the new page. The old and new pages look different, and the new one has some additional functionality, but most of the options are the same. If you are using the old bank feed, some options may have slightly different names and some may only be accessible by clicking on the transactions itself.

If you are seeing the old bank feed but would like to use the new one that matches this page, most users do have a notification at the top of the screen that lets you opt in to trying the new bank feed page. Just click on that, and what you see will match this guide!

Introducing the bank feed

Navigation: My Apps > Accounting > Bank Transaction

What is the bank feed?

The bank feed is a direct connection to your bank that brings in individual transaction information as it occurs in the bank system.

The intended purpose of the bank feed is to speed up the reconciliation process. When you reconcile a bank or credit card account, you are proving that the transactions appearing on your bank statement match up to transactions you entered in QBO. This ensures that nothing is missed and nothing is duplicated. To speed up the reconciliation process, you can match transactions you already entered in QBO to the transactions in the bank feed. To reconcile without the bank feed, you would need to have the bank statement open in one window and the QBO ledger open in another. Then you would mark off each transaction that matches in both windows. So the bank feed saves you time by turning this into a one-window, one-check process.

The other way the bank feed can save you time is by allowing you to add missing transactions to QBO. If a transaction shows up in the bank feed that you haven’t entered to QBO yet, then you can create the transaction straight from the bank feed. This saves a lot of time because much of the information you need is already there and you only have to fill in a few details.

A couple things to note: First, the information in the bank feed does not actually exist in your books while it is still in the bank feed. So if you run a report from QBO, nothing from the bank feed will show up. Those transactions do not exist in your financial system unless you have already added them either manually or from the bank feed. Once the transaction in the bank feed is either matched or added, it will disappear from the bank feed. Second, The bank feed will often pre-fill vendor, account, and class suggestions into the fields in the bank feed. Do not trust these! They are QBO’s best guesses and more often than not it gets it wrong. Always double check any data that has been pre-filled and update it as needed.

There are two things you will do in the bank feed:

1. Match Transactions
   • If you have already entered a transaction manually by following the instructions in the previous parts of the guide, then you will match the bank transaction to what you already entered. This is basically telling the system “This transaction in my bank account is the same transaction as this one that I already entered in QBO.”
2. Add new transactions
   • If you have not already added the transaction to the system, you may be able to add it straight from the bank feed. Whether or not you can or should add it from the bank feed depends on the type of transaction it is.

Types of transactions and how they interact with the bank feed

Transaction you cannot add from the bank feed:

Bills – Bills are entered on the date they are issued, not on the date they are paid. The bank feed only shows the date it was paid or, if it was paid by check, the date the check was cashed. So you will need to enter the bill manually. If you are on cash basis and not using QBO to track outstanding bills, then you won’t enter a bill at all. Instead, you will just enter the payment as an expense when it is paid.

Invoices – Invoices are entered as of the date they are issued, not on the date the payment is received. The bank feed only shows the date the payment was deposited in the bank, so you will need to enter the invoice manually. If you are on cash basis and not using QBO to prepare invoices or track outstanding invoices, then you won’t enter an invoice at all. Instead, you will enter the payment as a sales receipt when it is received.

Transactions you should only enter from the bank feed under very specific circumstances:

Checks – Checks should always be entered as of the day they are written for both cash and accrual basis accounting. So, for the vast majority of the time, these should be entered manually because they will only show up in the bank feed after they are cashed, which could be day, weeks, or months after the check is written. That being said, there are a couple settings in the bank feed that will allow you to enter a check accurately if it was cashed shortly after being written. So if a check pops up in the bank feed that you recently wrote but haven’t yet entered to QBO, you can enter it through the bank feed. Don’t forget to manually enter any other checks you have written!

Deposits – Bank deposits can be a combination of various different transactions, so it is better to enter those transactions individually and then create the deposit. Deposits look like a great place to enter each of those transactions on their own line item and call it good, but this can cause problems in your Customer records and make any potential corrections more difficult. One example of where a deposit added from the bank feed make sense is if you deposited cash donations right after an event. If you didn’t track who the donations came from, or if you track that information in your CRM, then there’s not much other information beyond the amount, account and class, and a deposit is fine for recording those.

Transactions that are generally well-suited to enter from the bank feed:

Expenses – These are what the bank feed excels at and is probably the best way to use the bank feed to reduce the time you spend on data entry. When you make a point of sale purchase with a debit card or credit card, the amount, date, and bank account will already be recorded in the bank system. Rather than creating a new transaction, entering all the information, saving and moving to the next one, you just enter what’s missing in the bank feed and post the expense.

Caveat: The bank feed usually has a delay for processing time. So if you buy something on December 31st, it might not show up in the bank feed until January 2nd. Especially if it is a significant purchase, this transaction should actually be recorded with the date December 31st so that it is included in the correct year’s financial statements.

Sales Receipt – Revenue without an invoice gets entered as a sales receipt. Since there was no prior revenue recorded from an invoice or based on a grant agreement, sales receipts can pretty safely be added from the bank feed.

Caveat: Sales Receipts are similar to expenses, in that if there is a delay in the bank records and the actual receipt date was in a previous period, you may need to enter manually or update the date of the transaction rather than using the date in the bank feed.

Bill Payments – After you enter a bill, you record a bill payment when you pay it. If you paid the bill but haven’t recorded the payment in QBO yet, then the open bill will show up as a match in the bank feed. When you match it to the open bill, QBO will create the Bill Payment transaction for you.

Caveat: QBO will bring up any open Bill in the same amount as a match, so ensure that you match the correct payment to the correct bill. For example, if you enter a gas bill for $100 and an electric bill for $100, QBO will pick up both of these as a match for any $100 payment from the account. You need to determine which match is the correct one.

Receive Payment – These are similar to the Bill Payments in that an open invoice can be matched to a payment received in the bank feed, and this will create the Receive Payment transaction for you.

Caveat: Like the bill payments, you have to ensure you are matching the amount received to the correct invoice.

Transfer – If you have both banks involved with the transfer of funds connected to the bank feed, QBO will often identify the matching transactions in each account and pair them. This way you can enter the transfer and match it in both bank accounts with one click.

Caveat: The QBO bank feed has a bad reputation with transfer transactions. This is because it will sometimes suggest a transfer to an expense or revenue account, and this is absolutely NOT the way to use a transfer transaction. Only use a transfer transaction for money being transferred from one bank account to another. Even if it is marked as paired with another account, still double check that it has picked up the correct matching transfer.

Credit Card Payments – These are similar to transfers in that if you have your credit card connected as well, QBO is likely to recognize the payment from the bank to the credit card, so it’s a really easy one to just click and post rather than creating the transaction from scratch.

Navigating the Bank Feed

1. Pending / Posted / Excluded menu
   • Pending: These are the bank transactions that are ready to review and match or add.
   • Posted: This is a list of the transactions that have already been matched or added. If you click “Undo” on any of the transactions in this list, one of two things will happen:
     • If you matched the bank transaction to an existing transaction in QBO, it will unmatch the transactions and send the bank transaction back to the Pending page. The transaction it was matched to will remain in QBO and can be matched to a different bank transaction if needed.
     • If you added the transaction from the bank feed, the transaction that QBO created will be deleted and the bank transaction will move back to the Pending page.
   • Excluded: There is an option to exclude the bank transaction. This moves the transaction out of the Pending page without matching or adding it. For the most part, you shouldn’t need to exclude transactions and you should only exclude them if you’re sure they are already entered to QBO. For example, I have had instances where the bank feed has a glitch, and will not bring in a transaction that I know has a matching transaction in QBO to match in the bank feed. In those cases, you can exclude the bank transaction and you’ll just need to manually check off the entry during reconciliation. If you accidentally exclude a transaction, you can undo it in this page and send it back to the Pending page.
2. Filter menu
   • Search: You can search for specific amounts or terms in the bank description and the bank feed will show only those transactions that match your search.
   • Dates: Search for transactions within a date range.
   • Transaction types: Filter by the type of transaction, whether it has a suggested match, or a rule, etc.
3. Pending transactions
   • Informational fields – These are the fields that show the information retrieved by the bank.
     • Date: The date the transaction posted to the bank account.
     • Full Bank Description: The description that will show on your bank statement or a summarized description, depending on what option you choose in the settings.
     • Spent: The amount spent in that transaction.
     • Received: The amount received in the transaction.
   • Editable fields
     • Date: This field can be editable by changing the settings.
     • Paperclip: Attachments can be added here.
     • From / To: Choose the vendor or customer.
     • Class: Choose the functional category.
     • Customer: If tracking restricted funds, this is where you choose the relevant customer for expenses.
     • Product / Service: If you are entering a Sales Receipt, you will have to choose a product/Service instead of an account. More on this in the entry instructions below.
     • Match / Categorize: This is where you can view any matching transactions that QBO picks up, or add the account information to add a transaction from the bank feed. If QBO shows a “matching'” transactions that is incorrect and you want to add the transaction instead, you can toggle between Match and Categorize.
     • Action: The default option is “post.” If the match is correct or if you have added all the relevant information, clicking post will match or add the transaction and move that line item to the Posted page. If you click the arrow next to Post, you will see a few more options:
       • Split: This lets you split the transaction into multiple line items so you can split the amount between accounts or classes if needed.
       • Create rule: You can create a rule for this and similar transactions. More on this below.
       • Categorization History: This will show you the accounts previously used for similar transactions.
       • Exclude: This will move the transaction to the Excluded page without matching or adding.
4. Export and Settings
   • You can either print the page or export it as an excel sheet if you want to see the list outside of the QBO system.
   • Settings: This is where you can update some the settings specific to the bank feed and customize it to your preferences and workflow.

Bank Feed Settings

• Columns: This is where you can choose which columns show up in your bank feed.
  • Files: This is the attachments column
  • Request more info: This is a new feature in QBO that lets you ask questions about specific transactions. For example, if you have a staff member that uses a credit card, and they made a purchase that you don’t recognize and need more information on, you can use this feature to send them an email with the transaction info and your question. Then they can respond with a message right in QBO.
  • Location: Only applicable if you use the locations field in QBO.
• Automation Review
  • The only option right now is Add new vendors. Choosing this will allow QBO to add common vendors to your vendor list if the automation doesn’t find a matching existing vendor.
• Table Preferences
  • Group rows by Selected Columns: You can click on the column headers and sort the bank feed based on the information in that column. The default and most common sorting is based on the date. I like to have this option turned on because it clarifies what month each transaction was posted in.
  • Show amount as Spent and Received: If you turn this off, the amounts will appear in one column as positive or negative.
  • Editable date field: This is where you can choose to make the dates in the bank feed editable.
  • Show Full Bank Description: This will show the full bank description as it appears on your bank statement. If you have this turned off, QBO will summarize the description.
  • Copy bank description to Memo: If you add a transaction, this will add the bank description to the memo, unless you enter your own description.
  • Add editable check no. column: This will allow you to add a check number to transactions that you add. Adding a check number will enter the transaction as a check instead of an expense. Sometimes the check number will be pre-filled by the bank information, but sometimes it will be blank even if it is a check transaction. It just depends on the information your bank sends over since each bank is a little different.

Click on a transaction to see more details and options

When you click on a transaction line, an extended menu will open that shows some more transaction details and editing options. Most of these match what you already see in the columns. The additional information and options include:

1. Memo: When adding a transaction from the bank feed, this is where you can add your own description for the transaction.
2. These are the same Action options you can select in the Action column dropdown.
3. The right side of the screen shows the transaction history for previous similar transactions. This can help if you’re entering a recurring transaction and don’t recall what account or vendor you used before.