A summary of our emails advising clients about digital accounting

1 June 2018
Digital Accounting - Bite Sized Chunk Number 1
This first ‘bite size chunk’ fills out what I have been saying for a long time – let your Bank do your book-keeping. Soon this will no longer be a wish – it will be forced upon us by changing Law (quarterly Tax Returns for the self-employed) and technology (Banks closing branches because we are using apps on our phones)
 
At the moment, Fair Balance does a lot of hidden book-keeping for our clients, and I am happy for that to continue. Taking the load off you and getting things right first time is more efficient than trying to sort out messes!
 
The least efficient means at the moment is a bag of receipts and bank statements – the most efficient is downloaded Bank transactions.
 
But even here, moving away from paying and receiving money by cheque or cash helps, because those transactions require further processing. If you pay by Debit card the statement is self-explanatory.
 
As we move towards receiving data automatically (and daily) into accounting software, here are practical steps you and I can take;
 
• Pay as much as you can by electronic means (Debit cards, Standing Orders, Direct Debits etc) so that the full description is on the statement;

• Avoid company credit cards linked to the current account (which HSBC pushes on everyone). The slight cashflow advantage is marred by having another, degraded feed of data that has to be analysed separately;

• Receive as much as you can by electronic means. Increasingly people are paying each other by internet banking and there are ways (GoCardless which we use, phone apps etc) in which small traders can take money via direct debit and by payment cards. I will expand on this in a later instalment when I talk about new card- and app-based bank accounts.
 
Clients are telling me that it is only the older generation who want to press cash into their hands, and it is tough to deal with this cash when it comes in – try spending it on a holiday!
 
Do you have an RBS group business Bank account?
(Royal Bank of Scotland or Nat West and Williams and Glyns)
 
I am going to extol the benefits of FreeAgent in a later instalment. With associated services it has halved what we are owed by clients in under a week and our accounts are now being put together for us in the background day by day using bank data fed to it by RBS/NatWest overnight. It is possible now to see how we might file quarterly Tax Returns.
 
This online accounting software, which you and I can run together, is free to customers of the Bank, as long as you have a business account. So I invite you to get going – tell us so that we can set up the links and start managing your data with you

8 June 2018
New app-based payment cards - Bite Sized Chunk Number 2
These are interesting times for new methods of making and receiving payments.

A company called Wirecard provides the software behind various retail-level products. All are very alike and use the Mastercard network (I have not seen any on Visa). The ones I have found so far are;

Starling (which I have)
Loot
Monzo
N26
(Ferratum Bank seems to be EU based, not in the UK)

Cool features
These are bank accounts based around a website and a phone app. You get a proper sort code and account number and can download statements in the traditional way (as PDFs or spreadsheets). You put money into the account, then spend it in any currency. You get the middle Mastercard rate (halfway between what foreign exchange bureaus buy and sell to you) with no fees. I see a lot of these fees on client’s records so one of these cards (or a Halifax Clarity credit card) is a good idea

Extra cool (as long as you avoid ATMs which charge their own fees) is drawing out foreign currency. Chrissie and I went around the square in Vera drawing out €20 a time on Starling. Avoid Santander (€5 Euro fee) and make sure you don’t let the ATM do the currency conversion and we were getting instant confirmations on my phone that £17.40 had gone out of the account.

We will be using this in New York – no money exchanges in the likes of WalMart because Americans don’t travel much!

On top of this you can easily take payments from friends and customers using a "settle up" feature. Oh, and I am getting 0.5% interest on my tiny balance.

A banking revolution

The Government and the EU are very concerned to create 'challenger banks'. Metro has successfully set up and are spreading out of London. TSB got split off from Lloyds and sold to a Spanish bank, and since RBS/NatWest was unable to split itself up it has been ordered to hand over £Millions to a startup challenger

As the online disaster at TSB has shown, and as we see from branch closures, these traditional operators are bound down by ancient inherited technology. Starling - which astonishingly has only 170 employees, is so much lighter on its feet and says it has picked up many disgruntled TSB customers

Similar technology
Tide aims itself at business users (Starling has just launched a business account)

B4B issues cards to businesses for their staff to use. So Bloggsname PLC could give cards to their staff (£5 a card, branded as Bloggsname for an extra fee), pre-load them with say £150 for a business trip. As it is a pre-loaded debit card, not a credit card, the staff member cannot over-spend and the spending data automatically flows back into the company accounts.

I will be interested to hear anyone's experiences of this and similar technology

15 June 2018
GDPR in action - Bite Sized Chunk Number 3
I thought you might be interested in how we are getting on with the General Data Protection Regulation.

A wise observation at Accountex was that GDPR is a marathon, not a sprint. No-one is in big trouble for not being 100% compliant on Day 1 so there is a no reason to panic, and a motivation for steady improvement. One aspect is paperwork.

16 years ago when we moved to Wood Row, the two upstairs rooms that Chrissie and I use as offices were crammed with paperwork - both past workings and clients' own records. This has naturally declined already to one book-case of clients' records (ready to be returned) and two shelves in a book-case. But even that has now been slimmed from 2 shelves to 4 (mostly empty) boxes. A couple of boxes contained papers that were over 10 years old and which I had not opened for that long - one sensible aim of GDPR is not to hold on to such stuff, so job done.

I looked into having other papers professionally scanned - but it was cheaper to replace my trusty Fujitsu sheet feeder with the Epson DS-780N - a wonderful device that whizzes through big piles and saves them as searchable PDFs.

Then we have to keep what remains under lock and key. I had to search the Web for a new lock as the keys for the 28 year old cabinet went astray . We have backup disks locked away elsewhere and passwords on the computers, so our compliance is improving!

22 June 2018
Some updates - Bite Sized Chunk Number 4

GDPR
Just a quick note this week. The Information Commissioner’s Office have now updated their online questionnaire. With this you can see if you need to pay a fee.

The subtle difference is that under the old Data Protection Act you either had to register and pay a fee and be bound by it, or not. These days we all have to follow GDPR, but we may or may not have to pay a fee.

A bloke in a swimming pool told me he had seen Elizabeth Denham (the Information Commissioner) on BBC Breakfast. She said straight out that Clubs and Societies don’t need to worry as people who join know what they are doing. I cannot find it online – did anyone see this?

The most pathetic story I have heard so far is of a Church which will now only pray for the sick by first name as they don't have their GDPR permission! (apparently if someone dies they feel able to pray for the family - by surname, because dead people no longer qualify for 'protection')

A financial safety warning
We can never remind enough to beware of phone and online scams. Last week a client had ALL his money stolen from his Bank. The details of how this happened are unclear but it involved a phone call and a suggestion he go into his branch the next day. Sensibly he went straight down there and discovered the scam so should be fully recompensed.

Banks cannot and will not continue picking up the whole bill for fraud - don't let them accuse you of helping fraudsters through negligent action.

This week we have been getting some VERY convincing SPAMs that look like genuine HMRC “Gateway Confirmations” – don’t click on the links in any of these.

Another one is “Outstanding Amount £23,831.64”

As ever, beware these things and refer them to me if you are in any doubt.

29 June 2018
GDPR in action - Bite Sized Chunk Number 5

Bank Security
I’m re-visiting this because I spoke to Barry who had his account raided. His story is a salutary one with some lessons;

Barry answered his mobile to “TSB Head Office” who asked if he had spent £1500 online with PC World. He had not, so was relieved that this had been noticed. He was asked to confirm some genuine transactions which he did and which further reassured him. The final reassurance was the request to go into his branch the next day.

By the time he got to the branch all but £700 had gone out of his account and another £500 went in front of the manager. When the mobile rang from “TSB Bournemouth” he handed it to her – the caller said they were from the branch, she said “no, I am” and he hung up.

So here are the key points;

• Banks will now NEVER phone you;
• If you get such a call, cancel it straight away because it seems that keeping you on the line allows your phone to be interrogated - that's how they quoted genuine transactions to Barry;
• Wait a minute before picking up again as the bad guys may be still on the line;
• Don’t reveal passwords etc (Barry will get his money back because he did not);
• Windows and Android (phones) are less secure than other systems available on the market (not new news). (Apple, cough)

Open Banking and Accounting programs
Barry’s problem has caused me to back-pedal on my advice to use Yodlee. Please DO use FreeAgent! If you bank with Nat West, RBS or Barclays the data is supplied direct by the Bank. You can also download QIF files from your internet banking and upload them to FreeAgent.

But at present FreeAgent cannot assure me that using the intermediary Yodlee to collect your data from other banks is safe. It probably is, but to do so you need to share your logins so could be blamed for losses and not get compensated. If I told you to do it and you lost money, you might sue Fair Balance Ltd!

It is frustrating because Open Banking arrived in January and the banks are not going fast enough. They should be providing APIs to developers but are dragging their feet (Lloyds has one for finding branches and ATMs but not for their ‘bank feed)’. It does have a Bank Feed agreement with Quickbooks and Xero so it seems that FreeAgent need to pull their finger out as well (though perhaps their sponsorship by NatWest skews matters?!)

Barclays Internet Banking
For years I have complained about this crappy service, but Barclays have been forced by Open Banking to upgrade their technology. It seems that one can now download data going back for at least a year, so that will help speed our work up.

It is still an exciting World of new technology, but sometimes a but scary

10 August 2018
Bite Sized Chunk Number 6
A couple of tips this week.

Banking cash straight into a deposit account instead of current account
Has anyone tried this trick which was suggested to me this week? Lots of businesses hate paying the extra bank charges for handling cash, and it sounds logical as I have never seen charges applied to any deposit account. This lady banks with HSBC and tells the counter clerks that they are putting the money in to save for their tax bill (which seems to stop them preventing her from doing it)

We have one client who saves any cash up for their Corporation Tax so might try this – you know who you are, Don !

You will not need to photograph or scan all receipts under Making Tax Digital (aka Quarterly Tax Returns)
Remember my maxim, ‘let the Bank do the book-keeping’. Use your debit card or internet banking etc to pay bills and the Bank gives you back an easy to read list of your transactions.

The new Bank Feeds make this even easier, so I don’t get very interested in the paperwork unless I need to answer a query. It should be safely stored for the last four complete Tax Years (so at present back to 6 April 2014) in case of a tax audit.

The same person who suggested the deposit account trick is scanning all her receipts and making a load of extra work for herself reconciling them (within the Xero accounts program) to the transactions. To me this is extra work being encouraged by people selling software (such as ReceiptBank) for their own commercial reasons.

The Institute of Chartered Accountants, no less, confirms that my method is kosher on their website;

"HMRC has confirmed that the requirement to keep digital records does not mean that businesses will have to make and store invoices and receipts digitally. Businesses can continue to keep documents in paper form if they prefer, although transactions will need to be stored digitally.”

This said, I’m a great fan of scanning paper, it’s just that I don’t spend silly amounts of time on it.

Being smart
The same person justified her behaviour by saying that she needed, whilst reconciling the transactions, to exclude personal purchases such as bottles of wine. The answer to that is simple. When I’m in Poundland I use the business card for business purchases and a personal one for personal purchases. Not only have I saved myself additional book-keeping, but I am establishing a pattern of behaviour that I can demonstrate to the authorities. Thus I have a system in place (which they like) for ensuring that I don’t claim what I should not.

If you get inspected, an officer who comes across that sort of thing early on forms a positive mindset that stops them digging deeper.

“These are not the droids you are looking for” - a sound principle

23 November 2018
Cyber Security

In 2012 LinkedIn suffered a data breach which compromised email addresses and passwords. It seems likely that I was one of these victims.

From this year under GDPR, sites that suffered such breaches have to tell the users within 24 hours – a Very Good Thing because it enables remedial action to be taken. Contrast this with Yahoo who kept quiet in 2013 and paid out $50 Million in compensation.

You can check by typing your email address into this website - https://haveibeenpwned.com

Why am I telling you this?
Well in October I got a ‘phishing’ email which said that our website had been breached. It quoted a real password I had used so I went around changing them. It actually caused a lot of collateral trouble because it interrupted the email flow and I think I lost some messages, but that was down to my ISP and the Apple software, not the criminals. A completely ruined Sunday.

Note – if you are worried that I have not replied to an email from around October, please send it again.

I was not worried about data loss, since we don’t store data on our websites. Neither do I have any embarrassing secrets that can be shared with strangers. Of course, if you do not have a website you will not worry at all.

As you may know, ‘phishing’ is intended to make you panic, and usually to open an attachment that infects your computer or to enter your passwords onto a fake website. This one, which has been featured in the Press demands that you pay up some Bitcoin. That is the last thing you should ever do – there is no guarantee that the criminals will stop doing you harm, in fact you will be put on the ‘sucker list’ and attract even MORE attention.

We have started to use the automatically-generated passwords provided by Apple, which are impossible to remember, but stored in Keychain. Windows offers similar solutions.