If you are using a cloud accounting service that has not negotiated to obtain feeds directly from your bank then you either need to manually upload your bank statements into the accounting package or use a third party provider to do it for you. Yodlee is a provider that several cloud accounting services have teamed up with to provide the bank feeds that their accounting service requires.
How Yodlee works is that you provide them with the details needed to be able to access your internet banking service. Their automated process logs into your account as required and extracts the required bank transaction data and delivers it to your accounting service. This removes the need for you to extract the data yourself from your internet banking to manually load into your accounting service and also avoids your having to work out which format to extract the data in so as to best transfer it across.
Unfortunately there are a number of issues with using Yodlee. Perhaps the biggest is that of security. In order to use Yodlee you need to give them the information that will allow them to log into your internet banking. If you read the fine print of the agreement that you signed with the bank when you set up your accounts you will likely find that you agreed to never give access to your account to third parties and that should you do so then the bank is no longer responsible for any unauthorised withdrawals from your account. In giving Yodlee access to read the transaction data from your internet banking you are giving up control of who can potentially have access to withdraw all the money from your account. This does not of course mean that Yodlee or anyone associated with Yodlee would ever contemplate doing any such thing - they wouldn't have been in business for as long as they have if there was even the slightest possibility that they might use the access you give them for anything other than the purpose for which that access was given. What it does mean though is that if someone else not associated in any way with Yodlee ever manages to gain access and withdraw money from your account that the bank no longer needs to consider reversing the unauthorised transaction as you have breached the conditions requiring them to do so by making your account accessible to a third party.
Another issue and one that is far more annoying is that the Yodlee feeds are inconsistent. With some accounts (particularly with credit cards) the feeds are inconsistent. You may end up with uploads that overlap resulting in duplicated bank transactions where you then have to delete the duplicates before you can reconcile the account. Even worse there can be gaps between the feeds where you end up with transactions being lost and where you then need to go back to your statements to manually enter the missing transactions (or get your bookkeeper or accountant to do it for you).
Given these issues with Yodlee you should always select to use a direct feed from the bank if one is available for any of your bank accounts. Do not be tempted to set up all the feeds through Yodlee if there is a direct alternative available for some of your accounts.
If you have any accounts where feeds through Yodlee are not available then you will need to manually upload the data for those accounts by extracting the data from your internet banking yourself and then manually loading it into your accounting service. If you are going to need to do that for any of your accounts then you may as well do it for all of the accounts that do not have direct feeds available and forget about Yodlee.
That just leaves the situation where all of the accounts you have where direct feeds are not available have feeds available via Yodlee. You will then need to make up your own mind whether to use the Yodlee feeds or to transfer your bank transactions manually.
Where all of your bank accounts do not have direct feeds available you should of course suggest to your accounting service provider that they should arrange for direct feeds as soon as possible.
This article written by Stephen Chapman, Felgall Pty Ltd.