Simply select your accounting package provider, grant Pulse permission to access view-only data and the game-changing insights will start landing in your inbox every single month!
Opening Accounting is the new golden child in financial services – and for good reason! It enables third parties, including banks, fintechs and alternative lenders, to source up to date financial data to provide an accurate picture of each and every business they work with. The benefit of this is that products and services can be catered exactly to a business’s needs, with more bespoke options available than ever before.
However, it’s important to add that this data can only be accesses with express permission from the customer and it can be revoked at any time, should the customer change their mind.
What are the benefits of Open Accounting?
1. It provides data that third parties can use to create truly bespoke solutions
2. It provides real time access
3. It shows the current health and wealth of a business
4. Transactions are already categorized which makes things so much simpler
5. Every single transaction in the accounting ledgers can be seen and in addition, Pulse can provide all the data insights a business needs to become better, bolder and crucially, more successful
6. Report data including: a firm’s most recent month’s Profit and Loss statement and Balance Sheet; purchase orders, sales invoices; aged debtors; and aged creditors, credit notes
...How can Open Accounting help Fintechs?
Open accounting benefits
With Open Accounting, a business’ accounting information is readily available, making it quicker for lenders to access recent Profit and Loss statements, purchase orders, credit notes and everything else they need to underwrite a loan or finance facility.
Open Accounting also helps brokers and Fintech’s like Pulse identify finance solutions with more attractive terms for their customers.
Until fairly recently, lenders had to rely on historic data to inform their decisions. Now the Making Tax Digital initiative is in full swing, businesses are obliged to keep their digital accounting records up-to-date. Open Accounting taps this rich cash flow information.
...Taking Open Banking a step further…
Open accounting enables lending institutions and other app providers to incorporate accounting data to support their service offering. It takes the open banking concept a big step further and allows businesses to grant Trusted Third-Parties (TTPs) access to view all the information available in their accounting ledgers. Of course if a business wishes to stop this access at any time it can do so.
Until recently much of the data easily available was historic. As a result of Making Tax Digital, HMRC mandates SMEs to keep accounting records up-to-date and in a digital format. Open accounting accesses this rich current financial data that is the lifeblood of a small business.
Open Accounting isn’t burdensome for the customer or the lender – the granting of permission is handled digitally and all the information is instantly available for the trusted third party to access electronically. It is tried and tested. And it is an immediately available solution to help lenders or other service developers to offer the exact products SMEs need.
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#1
Similar to Open Banking – a service that enables finance providers to access a business’ banking information securely and safely – Open Accounting enables businesses to permit Trusted Third-Parties (TTPs) access to the data contained in their accounting ledgers.
Simply put, Open Accounting means that Fintechs like Pulse can get a 360° view into the current financial health of a business to offer the right products and services to each business.
Of course, data from bank transactions is undoubtedly valuable, as it does provide fintech lenders with some of the information they need to offer commercial finance solutions that fit their personal situation and desired outcomes. But banking data is a little limited and it certainly doesn’t tell the whole story.
A match made in heaven – when paired with Open Banking, Open Accounting can provide a more complete, clearer picture of how a business is performing. Open Banking is great in that it hones in on cash movement and transactions within a business, but the buck ends there, which can cause a knowledge gap.
For example, a business that has fallen behind their payments to suppliers could show plenty of cash in its bank, meaning it looks like they can can afford to borrow substantially more… when in actual fact, that business might be better suited to a lower amount or different lending product altogether.
Real-time access addresses this common challenge and means that lenders can provide products to customers that are the perfect fit. It’s a better outcome for everyone, as the risk exposure is significantly reduced for lenders, whilst businesses get the perfect product and loan amount to suit their situational needs. When combined, Open Banking and Open Accounting tells third parties everything they need to know before progressing with loan applications.
...#2
Open Accounting is so much simpler than it sounds. It’s not complicated for lenders or the businesses granting access, either. The journey is effortless, which is why this is becoming part and parcel of every day business lending. Fintech is always focused on innovation and streamlining processes wherever possible – and that’s exactly what Open Accounting does!
To do what Pulse does, we need access to the data stored within your accounting package. But remember, it’s not compulsory. We can’t (and would never) force any business to provide access to their accounting data. The control is all yours and you can revoke access at any point!
...#3
In simple terms, no, it doesn’t. Open Accounting is completely safe and was designed with data privacy in mind. O
Fintechs like Pulse cannot access any data within an accounting package without the business first granting third party, read only access. You’ll never, ever be opted in – you must always give clear consent before we’re able to view your accounting data.
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The data fintechs can access from bank transactions is definitely useful, but it’s not enough to provide the perfect fit in terms of lending products. When paired together, Open Accounting and Open Banking paint the complete picture of a business. The added clarity means that commercial lenders can provide loan offers to businesses that truly match up to their personal requirements.
Worried about GDPR? Don’t be! You can provide access to your accounting package and still remain totally GDPR compliant! There is no conflict whatsoever, as Open Accounting is totally safe and secure.
While the actionable insights that can be obtained through Open Banking are highly beneficial to any business, it is restricted to viewing just the incomings and outgoings of your bank accounts, without having the oversight of a company’s entire financial health.
Open Accounting takes this data access further by granting insights into a business’s entire accounting package, from its most recent profits, through to outstanding liabilities. This means a more comprehensive view of your company’s health can be put together, shedding light on relevant financial trends to help make decisions, while also helping lenders offer more tailored and suitable facilities.
Despite their differences, it is worth stressing that both Open Banking and Open Accounting can only access a business’s data with the client’s permission, and strict laws protect what happens to that data once access is granted.
Once access is granted, open accounting will be able to access all of the same ‘read-only’ data that is available to your current package provider. It will have a full scope of your accounting system, covering assets, liabilities, and your overall equity to create actionable insights which your company can use to improve its financial position.
Because open accounting takes regular, real-time snapshots of your data, it means you don’t need to wait for reports before you can make monetary decisions. Through our access to your accounting details, you too will gain access to streamlined financial reporting and feedback.
Open Source Software works by using ‘view-only’ data taken directly from wherever you grant it access to, in this scenario it will be your accounting information. It does this via secured APIs (or ‘Application Programming Interfaces’), which are used in almost every phone app, banking app, or search engine that we all use on a daily basis. The information will go from your accounts directly to the third party you choose to work with. The encryption and authentication processes available through APIs also offer customers further peace of mind despite the tried and tested safety the applications offer.
Once a business’s data is with a third party, it is also safeguarded by the UK’s Data Protection Act, meaning there will always be complete transparency in how your data is secured and used. After permission to access data is given to the third party, a company can also revoke that access at any time should they choose to do so.
Open accounting cannot access any information which, firstly, you do not allow it access to, and secondly, because the software can only interact with information that is already available to your accounting service, you will not need to offer up more data.
As we have also already mentioned, open accounting is designed with privacy in mind, and any information you do share will remain private and secure through APIs and data protection.
There are three primary benefits Open Accounting can bring to businesses, between frequent and up-to-date financial feedback, the proposed savings this valuable information can provide, and the loan options lenders can suggest through this information, Open Accounting brings a wealth of insights that, if acted upon, can greatly improve your business’s overall health.
The real-time data Open Accounting can feed to your business covers the full spectrum of your accounts. It monitors payable and receivable, while tracking your market costs and operations to help create a complete picture of your finances. Once enough data is gathered, and patterns begin to emerge, ‘actionable insights’ can be obtained and acted upon to improve business performance.
Actionable insights are conclusions collected from the read-only data made available to a business. Such insights can subsequently be used to improve a company’s financial decisions and overall performance by highlighting where savings can be made. Because of the precise overview Open Accounting creates, it can also help a company choose a loan option that is best suited to them.
Once a business and the third party providing their open accounting service have a live picture of their finances, they can create bespoke loan suggestions based on reliable data, rather than projections and guesswork. This means companies can borrow with much more confidence, using the provided data and actionable insights to understand what they can afford and capitalise on.
Because open accounting provides lenders with quick and detailed access to a business’ up-to-date financial information, it makes it faster and easier to approve a loan or finance facility. With more informed decisions available, lenders are more likely to work with these businesses looking for finance, resulting in quicker returns on their investments.
