How business bank accounts integrate with FreeAgent and Xero

Regulations are why your bank feed requires reconnecting every 90 days. But even that is among the pluses of your business transactions and accounting now being sync-able.

Having your business bank transactions automatically sent to your accounting software is just one of the many ways that digital technology makes life easier for limited company contractors.

Banking + accounting: They’ve come a long, long way together…

But how does business banking integrate with accounting software such as FreeAgent and Xero? Is it safe? And how exactly can it make financial management easier for contractors?

In this article exclusively for ITContracting.com, I will address these questions and more, starting with the underlying technology that makes it all possible – bank feeds, writes Aiste Krevneviciute, an acting vice president at Tide.

What is a bank feed?

When you integrate, or “connect” your bank account and accounting software, you’re really setting up a bank feed.

A bank feed is a secure, digital connection that automatically sends transaction data from your bank account to your accounting software — usually on a daily basis.

Bank feeds use Open Banking’s secure technology and rigorous standards to provide an encrypted connection that keeps your financial data safe.

How to set up a bank feed

Exactly how you set up a bank feed will depend on who you bank with and which accounting software you use, but the process is pretty similar across all the major providers.

Within FreeAgent, you’ll go to the “Banking” tab, select “Connect your bank,” and choose your banking provider. Next, you’ll go through ‘consent’ and ‘authorisation,’ which temporarily takes you to your bank’s website, before you complete the connection.

In the Xero platform, the process is almost identical — except the banking tab is called “Bank accounts” and to connect your bank you select “Add a Bank Account.”

Final and fintech steps

With both providers, the final step is to select a transaction start date. Most accounting software providers allow you to pull through up to 12 months’ worth of transactions.

This process can often be reversed for those who bank with a fintech.

If you have a Tide account, for example, you can connect to Xero from within the Tide platform itself.

Why do you have to give consent for a bank feed every 90 days?

To comply with Open Banking regulations, each bank feed is authorised for 90 days only.

You’ll get an alert a few days before the feed expires, prompting you to re-authorise within your accounting platform.

Be aware, the feed stops automatically if you don’t re-authorise.

This is an important security feature of Open Banking bank feeds. And it is one designed to combat fraud and ensure that nobody accesses your bank data without your explicit consent.

Are bank feeds safe?

Yes. In addition to the 90-day re-authorisation process, bank feeds are subject to other strict Open Banking security rules.

This means bank feeds are encrypted; used only by regulated providers, and that your banking credentials are stored securely (and never seen) by your accounting software provider.

Three benefits for contractors of bank-to-accounting software

So, bank feeds are secure and easy to set up.

But how exactly does bank-to-accounting software integration benefit small business owners and contractors?

Here are just three of the big benefits of using a bank feed:

1) Less manual effort

If your bank doesn’t offer bank feeds, you’ll have to manually import your bank statements into your accounting software.

This means downloading an OFX or CSV file, and then uploading it into a separate system — precious time you could have spent on client work.

2) Fewer input errors

Wasted time isn’t the only downside to manual imports.

Human error is a risk that comes with every file download and upload, and these can be difficult and costly to fix later on.

A bank feed transfers your cleared transactions accurately, virtually eliminating this risk.

3) Better financial oversight

Receiving your transaction data on a daily basis allows your accounting software to perform automated bank reconciliations, categorisation, cash flow analysis, budgeting, invoice tracking and often even more.

The advantage is that you can be alerted to potential problems much more quickly than manual monitoring. It should also help you make better-informed decisions about your business’s future.

Not using FreeAgent or Xero? Tide integrates with others too

If you’re interested in an account with us but you’re not using FreeAgent or Xero, don’t worry. Tide accounting integrations also cover Sage, QuickBooks, KashFlow and a few others.

Looking for a free limited company bank account, plus FSCS protection?

With Tide, you can open a free business bank account online in minutes with no monthly fee. Up to £85,000 of your deposits are also FSCS-protected on eligible business bank accounts. Enjoy £50 cashback and free transactions for 12 months for IT Contracting visitors.