Phase 3 – Banking & Daily Processing
Lesson 1 – Bank Feeds, Matching Transactions & Transfers
Learning Objectives
By the end of this lesson, the Junior Bookkeeper will be able to:
- Explain the purpose of bank feeds.
- Understand when to Match, Add, or Transfer a transaction.
- Identify duplicate transactions before posting.
- Correctly process customer payments and supplier payments.
- Understand common bank feed errors.
- Properly record transfers between business accounts.
- Recognize when additional research is required before accepting a transaction.
- Understand how bank feed decisions affect financial reporting.
Why This Matters
Bank feeds are one of the most powerful features in QuickBooks Online, but they are also one of the easiest places to create errors.
Selecting the wrong option can result in:
- Duplicate income
- Duplicate expenses
- Duplicate GST claims
- Missing customer payments
- Incorrect bank balances
- Unreconciled accounts
- Inaccurate financial statements
Our goal is not to clear the bank feed as quickly as possible. Our goal is to ensure every bank transaction is accurately represented in the accounting records.
What is a Bank Feed?
A bank feed automatically imports transactions from a financial institution into QuickBooks Online.
Bank feeds do not create accounting records on their own. Instead, they provide information that must be reviewed and matched to existing accounting records or added as new transactions when appropriate.
Every imported transaction requires a decision before it is accepted into the books.
The Three Possible Actions
For most bank feed transactions, there are three possible actions:
- Match
- Add
- Transfer
Choosing the correct action depends on what has already been recorded in QuickBooks.
Match
A Match is used when the transaction already exists in QuickBooks.
QuickBooks searches for transactions that have already been entered and suggests possible matches.
Examples include:
- Customer invoice payments.
- Bills that have been paid.
- Credit card payments already recorded.
- Deposits previously entered.
- Payroll transactions.
- Sales imported from integrated applications.
When a Match is accepted, QuickBooks simply links the imported bank transaction to the existing accounting record.
No new accounting transaction is created.
Add
Use Add only when the transaction does not already exist in QuickBooks.
Examples include:
- Bank service charges.
- Interest income.
- Small purchases made directly from the bank account.
- Miscellaneous expenses not previously recorded.
Before selecting Add, confirm that the transaction has not already been entered elsewhere.
Adding a transaction that already exists creates duplicate income or duplicate expenses.
Transfer
Transfers move money between accounts owned by the same business.
Examples include:
- Chequing to savings.
- Savings to chequing.
- Bank account to credit card.
- Credit card payment.
- Moving funds between operating accounts.
Transfers do not create income or expenses.
They simply move assets or liabilities from one account to another.
The Bank Feed Review Process
Before accepting any transaction, follow this process:
Step 1
Review the bank description.
Step 2
Review the transaction amount.
Step 3
Review the transaction date.
Step 4
Determine whether QuickBooks suggests a Match.
Step 5
Search manually if no Match is suggested.
Step 6
Review supporting documentation if necessary.
Step 7
Determine whether the transaction should be:
- Matched
- Added
- Recorded as a Transfer
Only after completing these steps should the transaction be accepted.
Understanding Duplicate Transactions
Duplicate transactions are one of the most common bookkeeping errors.
Duplicates often occur when:
- An Expense is manually entered before the bank feed arrives.
- A Bill is paid correctly, but the bank feed transaction is added instead of matched.
- Customer payments are manually entered and then added again.
- Integrated software posts transactions automatically, and the bank feed transaction is added a second time.
Duplicate transactions affect:
- Profit & Loss Statements.
- GST returns.
- Bank reconciliations.
- Financial reporting.
Always search for an existing transaction before selecting Add.
Customer Payments
When a customer invoice has already been created:
- The payment should normally Match to the invoice payment.
Do not create additional Sales Receipts or Deposits unless required by the workflow.
Incorrectly adding customer payments can duplicate revenue.
Supplier Payments
Supplier payments should normally match:
- Existing Bills.
- Existing Expenses.
- Existing Credit Card transactions.
If payment has already been recorded in QuickBooks, the bank feed should almost always be matched.
Credit Card Payments
Paying a company credit card is not an expense.
It is a transfer between two company accounts.
Recording a credit card payment as an expense duplicates expenses that were already recorded when purchases were made.
Always determine whether the transaction represents:
- A purchase
- A payment
- A transfer
Bank Rules
Bank Rules can improve efficiency by automatically suggesting coding for recurring transactions.
Examples include:
- Monthly bank charges.
- Subscription software.
- Insurance payments.
- Telephone bills.
While Bank Rules save time, they should never replace professional judgment.
Always review the suggested coding before accepting a transaction.
Research Before Accepting Transactions
Never accept a bank feed transaction simply because QuickBooks suggests an account.
Instead:
- Review supporting documentation.
- Search existing transactions.
- Review previous months.
- Confirm vendor history.
- Determine whether the transaction has already been recorded.
QuickBooks provides suggestions—not guarantees.
The bookkeeper is responsible for ensuring every transaction is accurate.
Common Errors
Adding Instead of Matching
This is the most common bank feed mistake.
When an existing transaction is added instead of matched:
- Expenses may be duplicated.
- Revenue may be duplicated.
- GST may be overstated.
- Bank reconciliations become more difficult.
Recording Transfers as Expenses
Moving money between business accounts is not an expense.
Examples include:
- Credit card payments.
- Savings transfers.
- Internal bank transfers.
These should generally be recorded as Transfers.
Accepting Transactions Without Reviewing Documentation
Bank descriptions often provide limited information.
Never assume the suggested account is correct.
Always confirm the nature of the transaction before accepting it.
Ignoring Existing Transactions
Before adding any transaction, search QuickBooks.
An existing Expense, Bill, Deposit, Invoice Payment, or Journal Entry may already exist.
Adding another transaction creates duplicates.
Eagleeye Research Standard
Before accepting any bank feed transaction:
- Review the bank description.
- Search QuickBooks for an existing transaction.
- Review supporting documentation.
- Review historical transactions.
- Determine whether the transaction should Match, Add, or Transfer.
- Explain your reasoning before escalating questions.
Our objective is accuracy first, efficiency second.
Competency Checklist
Upon completion of this lesson, the Junior Bookkeeper should be able to demonstrate the following competencies:
□ Understands the purpose of bank feeds.
□ Correctly distinguishes between Match, Add, and Transfer.
□ Recognizes duplicate transaction risks.
□ Correctly processes customer payments.
□ Correctly processes supplier payments.
□ Properly records transfers between company accounts.
□ Reviews supporting documentation before accepting transactions.
□ Demonstrates independent research before requesting assistance.
□ Understands the impact of incorrect bank feed decisions on financial statements.
□ Maintains accurate accounting records while processing daily banking activity.