Published May 2014 | Updated May 2022 | Revised June 21, 2024
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?
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.
Check out Noodlesoft's Hazel. It automates organizing your paperless files on your Mac.
If you have a Windows operating system, File Juggler is similar. It automatically organizes your documents so you don't have to.
Check out Noodlesoft's Hazel. It automates organizing your paperless files on your Mac.
If you have a Windows operating system, File Juggler is similar. It automatically organizes your documents so you don't have to.
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.
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 ...
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!
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 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:
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.
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:
2. Security Risks:
3. Challenges:
1. Consent and Security:
2. Data Accuracy, Integrity, Reliability and Efficiency :
3. Regulation and Compliance:
4. User Experience:
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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