Online Cashbook Accounting App BanktoBook

BanktoBook - The Story

BanktoBook - The Bank-in, Book-Out gateway for ultra-easy bookkeeping

Development history

How it started

Back in 1985, the author wrote a receipts and payments accounting system for a Government department. This is what he had to say.....

It had budgets and actuals, payment vouchers and management reporting. It was redeveloped into a general purpose business cashbook system. In the early 1990's, a complete integrated accounting system was developed.

It was also used for my own accounts. It was easy enough to use and provided all that was needed to give the tax accountant. Attempts were made to shift to the prevailing mainstream accounting products but each time the experience led back to using my own system. It also led to a clear understanding of the minimum one needs to do before handing over to the tax accountant.

While helping others to get start on bookkeeping and accounting, it became apparent that there is a huge learning curve for the novice to learn standard accounting terms and concepts. One day my son asked why can't it just be called 'ins' and 'outs'. He was running his own business and had trouble doing data entry and bank reconciliation. I wanted to help him so I asked him to download all the transactions the banks would give on these three bank accounts (main, loan and credit card). I wrote software that would import the transactions and identified rules processing that would automatically put the entries into categories. It began to work. This was exciting. The realisation dawned on me that this could be used for my own accounts. In a short period, I had the latest three months of my main account automatically loaded and reconciled. I then loaded my other bank accounts - five in total. I could now do personal and business bank accounts plus my self-managed super fund account in minutes with no manual data entry.

How it improved

It became apparent that this concept had much general potential. It was 'Bank in' and 'Book out'. Take it a step further and it becomes a gateway to other accounting systems. Import from bank, automatically categorize, allow the user to fine-tune the rules and output in an accountant ready format. It kept expanding with the ability to export transactions in common formats. It is then a gateway to many other systems.

There is a commercial aspect to this too. Even the largest corporations have to import bank supplied transactions and most accounting systems do that. This is for bank reconciliation. But there is difficulty in extracting invoice numbers and cheque numbers because they are 'buried' in the description rather than a unique field. There are also special reference numbers. For example, customers are asked to make sure they put a special reference number on a deposit slip. It may be a customer reference number with a special prefix such as '9987' and the number is say '998712345'. The corporation needs to extract the transactions with these special numbers and then pass them to another sub-system for processing. BanktoBook is able to be used for the rules matching and as a gateway from the bank to the corporation's other software.

The most difficult part is in the rules processing. There was a need to extract cheque numbers, invoice numbers and special reference numbers or codes. So more rules were developed and it was working. The exciting part is that more rules can be added and even be customised for a particular customer.

There is also the need to protect the user from loading the same data twice. It's called avoiding duplicates. It required special matching logic to test for the same transaction not only in the current bank account but what if they loaded entries into the wrong bank account. They needed to be warned and be able to remove them easily (undo). It also provides for files with an overlap of dates and automatically avoids the duplicates. So there is 'Manage Imports' where all imports are tracked and traced by each original import file.

The data should match exactly to the bank. There is a simple bank reconciliation method which checks that the closing bank balance is the same as the book closing balance. The user needs to be prevented from ever getting it out-of-balance. Therefore, an amount cannot be changed. An amount can be distributed into smaller amounts and different categories but only where they add to the original amount.

A 21st Century System

Doing accounting based on bank account transactions was not as feasible in the past. It is a now 21st Century concept. This is the age of electronic processing. Internet banking, credit cards and EFTPOS machines mean that the bank holds more transaction detail. Cheques (checks) are always extra work and are being used less and less. There is also a way to handle cash income and cash expenses. However, cash income that never gets into a bank account is potentially not traced and should be avoided.

The Concept of a Gateway

A gateway is a system that provides a link between two or more other systems.

Imports and Exports

Importing is the action of bringing data in from one system. Exporting is the action of proividing the data in a format that another system can use.

We understand the complexities of reading and formatting data in many formats.

Our special output format means the data can be brought into a spreadsheet for further manipulation and analysis. It can be given to a tax agent for end-of-year tax preparation. It can be extracted for any period. The most common being monthly, quarterly and annually.

Category Translation

There is the ability to store the account coding for a different accounting system. We can translate our internal format to a different format to enable the data to be brought into another system.

Ability to Add New Formats

We can add new input and output formats according to customer requirements.

About Terminology

Accounting terms and terminology can be a real blockade for non-accountants. BanktoBook endeavours to simplify the terms and also simplify what the user needs to do.

Some Terms Used

We decided to use "Income' and Expense' as the most universally recognized terms for the two main transaction types.

'Accounts' are a working image of the bank or financial institution accounts as uploaded into BanktoBook.

'Categories' seems to be the best term for what is usually called the general ledger accounts within the chart of accounts. BanktoBook provides a set of standard Categories as an easy starting point. We use a 4 digit numeric coding method with a description. The user mainly deals with the description.

'Merchants' are typically the party associated with the transaction. For example, if you receive income from an employer or debtor then the employer or debtor is the merchant. If you pay money to someone for a product then that someone is the merchant. If you transfer money from one account to another the merchant is just a short name code such as 'TFERIN' nad 'TFEROUT'. They are like categories within categories. These are the most powerful and easy to use. We call them memonics because they are easily remembered and can be searched for alphabetically. Merchants make BanktoBook easy to use and easy to change. The user mainly deals with merchants and the association with categories is automatic.

Single-Sided Entry is easier to manage

Most standard accounting systems are double-sided entry. They try to make it easy. But, as my daughter was told when she did an introduction to a so-called easy-to-use accounting system, 'You cannot do accounting unless you understand double-sided entry!' She had trouble understanding this module and very few of the class managed it except by remembering some of the instructions by rote. 'When you do that always do this...'. Accountants understand it because it is their 'bread and butter' concept. BanktoBook is single-sided entry. It never gets out of balance because you cannot enter a transaction. However, you can split or distribute an entry into many categories. Transactions only come from the uploading of bank account transactions. This is why it always balances to the bank.


 

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