Do You Need To Download Your Paperless Statements?

Focus on Electronic File Organization

Published May 2014 | Updated May 2022 | Revised June 21, 2024

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WHAT'S IN THIS ARTICLE
Why you want to download your paperless statements | Automate filing of paperless receipts |  Paperless statement procedures | Automate using an app | What is open banking? | How Would a Consumer Use Open Banking? | What is Screen Scraping? | How is Open Banking Different From Screen Scraping of Data? |Where is Open Banking Legislation in Canada at?

Why you want to download your paperless statements?

There is nothing worse than being in the middle of an audit with the CRA or IRS and not having your paperless statements or bills you need because you didn't download the information!

Paperless statements are great ... BUT only if you download them on a regular basis. It's getting more difficult to have your paperless statements automatically fetched from document manager such as Hubdoc or LedgerDocs as well as QBO and other cloud apps.

Open banking is coming to Canada, but it's doing so at a slower rate than other countries. Open banking could help download your paperless statements. Until then it gets here, you need to have procedures in place to ensure it’s happening either manually or through an app screen scraping ... that is if you want audit ready books.

Remember, an auditor wants to see those bank and credit card statements because they are reliable third party sourced information and they help you prove one part of the support documentation puzzle - proof of payment (not proof of purchase - you need both).

Sometimes when I'm doing backwork for a client, I request some paperwork that is missing. The client signs into their online account to obtain the data I need only to find the eStatement or eBill for two or three years back is no longer available. This could have been avoided if only they had made an effort to download the paperless statements on a periodic basis.

Mr. Paperless wrote a great blog about whether it is okay to leave your bank or vendor statements on the third party website. I found myself nodding my head in agreement as I read  through the blog post.

As Mr. Duncan points out, "you are responsible for your own data. Even if you entrust it to a third party, you are still responsible for your own data. You would be well served to take that responsibility seriously."

Each company and financial institution has their own online data retention policies. While often times the statements are available for as long as you have an open account, other times that is just not the case.

A recent example I experienced was when I closed a bank account recently. I had other active accounts with the institution so I didn't think too much about my eStatement(s) for that account. When I went to do my downloads ... okay I'll admit I was a few months behind on this task for that particular account ... access to the eStatements was gone!

I had to phone the bank (which I did immediately while they still had easy access to the data) and request a printed copy of the transactions since my last download. Lesson learned the hard way.

For me this is the big drawback of online banking. If you leave the institution, you lose access to your data.

Develop Paperless Statement Procedures

If you are not using an app like Hubdoc to fetch your statements, please make your life easier and modify your "to do" task list by adding the following ...

• Sign up for bank and credit card eStatements ... and download them. Most banks will give you a notice when your statement is ready for downloading.
• Don't forget to download copies of your cheque images if they are not included as part of your bank statement. Without these, you change banks and they may not be retrievable. Many banks only give you 90 days to download before service charges apply.
• Sign up for eBills for your utilities and various suppliers ... and make a point to download them.
  
• Download your eMerchant statements. Your bookkeeper needs this information to record your deposits and fees when doing backwork. It can also help when reconciling the bank deposits to the POS terminal.
  
• Don't forget those eMail receipts and customer payment notices while you are at it. If you change email services those eReceipts are gone if you didn't print them or download the attachments. The easiest method is to download the email attachment or print a pdf copy of the email as soon as you've opened the email.
  
• If you use PayPal, go in and setup monthly financial summary statements (under history>reports) ... it only works on a go forward basis. Using the monthly financial summary makes reconciling your PayPal account a breeze. One way I use the statement is to book the PayPal service fees in one lump sum instead of by transaction.

During an audit, you will be grateful you took the time to perform this task. The preferred filing format is PDF. The task should be done monthly but really quarterly works too!

Automate Using An App

Since I first wrote this article, your options have changed. There are a lot of apps out there that will help you collect your documents and store them in the cloud ... reducing your pain point significantly.

LedgerDocs is great if you like to "keep it simple". Bookkeepers raved about Hubdoc's ability to fetch statements. However due to changing technology and industry standards, connections are now often blocked by banks and online supplies. Hubdoc has made the difficult decision discontinuing fetching on April 27, 2022 due to the changing protocols. They will work on obtaining direct connections with banks ... so keep your eye out for that. Other fetching apps will likely be following suit or switching to direct bank connections like Hubdoc and QBO have.

There are a lot of options out there now. You owe it to yourself to research them and pick one that suits you.

Publisher's Note: Xero purchased Hubdoc in 2018.

Open Banking is Coming to Canada

What is Open Banking?

Open banking is a system that allows third-party financial service providers to access a consumer's banking, transaction, and other financial data through secure and standardized Application Programming Interfaces (APIs). This is done with the explicit consent of the consumer.

The goal is to enhance customer experience, foster innovation, and increase competition in the financial services industry. Standardized APIs developed under an open banking framework are a more secure, reliable, and compliant alternative to screen scraping. Here are some of the features of open banking:

1. Consumer Control: Consumers have full control over who accesses their financial data and for what purpose.  These APIs allow third-party services to access necessary data without needing user passwords, thus offering better security and control.
   
2. Security: Standardized APIs ensure high levels of security and compliance with data protection regulations.
3. Interoperability: Encourages different financial service providers to work together seamlessly.
4. Innovation: Facilitates the creation of new financial products and services, such as budgeting tools, financial management apps, and personalized financial advice.

How Would a Consumer Use Open Banking?

The best example I can give you right now any cloud technology apps you use to manage your personal or business finances such as Quicken (a budget app) or QuickBooks Online (an small business accounting app). The technology whl allow you to consolidate all your financial data into one place so you can manage your finances better.

Basically open banking would give you control over your financial data instead of your bank having control.

What is Screen Scraping?

Most bank feeds today use screen scraping. Screen scraping is a technique used to extract data from the display output of another program. Essentially, it involves a third-party application logging into a user's account (with the user's credentials) and then "scraping" or collecting the visible data from web pages, mimicking human interaction.

As banks continually upgrade their security, website designs, or change their login requirements, gathering bank feed data through screen scraping becomes difficult which is why Hubdoc for example stopped fetching statements in 2022. Intuit began addressing the connectivity issues in 2019 by working with the larger financial institutions to implement direct API connections. By 2023, I believe many US banks feeds in QBO use API technology (but I could be wrong). I'm not sure if that is the case in Canada yet.

Here are the key points of screen scraping:

1. How Screen Scraping Works:

• A user provides their login credentials to a third-party service.
• The third-party service uses these credentials to log into the user's online banking account or other financial platforms.
• The service navigates the site and collects the data displayed on the web pages by parsing the HTML code.
• The data accessed typically includes account balances, transaction histories, and other financial information displayed on the user's online banking interface.

2. Security Risks:

• Credentials Sharing: Users must share their login credentials with the third party, creating security vulnerabilities.
• Data Breaches: Because the scraping software often uses the same pathways as human users, any data breach of the third-party provider can potentially compromise sensitive information.
• Regulatory and Compliance Issues: Screen scraping doesn't always align with privacy laws and regulations, making it a less ideal solution as regulatory bodies push for more secure alternatives.

3. Challenges:

• Interface Changes: If a bank updates its user interface or website, screen scraping tools may break, causing data extraction failures.
• Data Integrity: The data extracted via screen scraping can sometimes be incomplete or incorrect due to errors in parsing the website's HTML structure.

How is Open Banking Different From Screen Scraping of Data?

1. Consent and Security:

• Open Banking: Requires explicit consent from the consumer to share data. The data transfer is conducted through secure APIs, reducing the risk of data breaches and unauthorized access.
• Screen Scraping: Involves consumers sharing their banking login credentials with third-party providers. These providers then log in and "scrape" the data from the screen, mimicking user behavior. This method poses significant security risks since it requires handling sensitive information like usernames and passwords.

2. Data Accuracy, Integrity, Reliability and Efficiency :

• Open Banking: Data is fetched directly from the bank's systems through APIs, ensuring accuracy and integrity. APIs provide a streamlined and efficient way to access data. They are designed for high availability and reliability.
• Screen Scraping: Data may be incomplete or distorted due to changes in the bank's interface, leading to potential errors. Can be unreliable due to changes in web interfaces or technical issues, leading to interrupted or failed data access.

3. Regulation and Compliance:

• Open Banking: Operates within a regulatory framework, ensuring compliance with data protection and privacy laws.
• Screen Scraping: Often operates in a grey area and may not fully comply with data protection regulations.

4. User Experience:

• Open Banking: Offers a smoother and more transparent user experience, as consumers know precisely what data is being shared and why.
• Screen Scraping: Requires consumers to share sensitive login information, making the process less transparent and potentially confusing.

Where is Open Banking Legislation in Canada at?

Open banking is not available in Canada yet like it is in the U.K., Brazil, and Australia because our regulatory framework that forces banks to share your data with other institutions and fintech companies if you request it is not yet in place. Open banking in under development in the U.S. and Arab Emirates.

The 2024 Federal Budget created a government body to oversee the regulations and the Department of Finance is tasked with developing policy over the next three years. Yes you read that right ... three years! It is the opinion of some that the government is only doing the minimum in advancing open banking to save face instead of placing Canada at the forefront of technology.

Australia took two years (2017-2019) to implement opening banking with more funding than Canada has currently provided.

Source: Growling WLG April 2024 "Open Banking is Coming to Canada – But Can It Come Fast Enough?" CBC interview with lawyer P. Sabot-Stephenson; The Globe and Mail May 2024 "Canada lags other Western countries in implementing open banking" by S Farooqui 

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