The two bookkeeping modes
DOCUMENT-LED
Documents create the accounting story
Invoices & receipts↓ OCR + staff reviewSales / purchase ledgers↓ Match settlementsBank reconciliation↓VAT, schedules & reports
Best where source documents and ledgers are the primary evidence.
BANK-LED
The bank creates the accounting story
Bank statement↓ analysis + codingPosted bank transactions↓ evidence when neededCash VAT & ledgers↓Schedules & reports
Best where the bank feed/statement is the primary bookkeeping record.
This choice is fundamental. Do not treat the modes as two views of the same workflow. They change the evidence hierarchy, posting route and VAT possibilities.
Which mode should I choose?
Are invoices/receipts the primary accounting evidence and ledgers should be built from them?
Choose Document-Led.
Is the bank statement the primary record and the practice mainly codes cash movements?
Choose Bank-Led.
Do you need Standard VAT from invoice data?
Use Document-Led.
Do you want Bank-Led bookkeeping?
Bank-Led supports VAT Cash Basis only.
If the client’s real process changes materially, review the mode with care before changing live accounting treatment.
What changes between the modes
| Area | Document-Led | Bank-Led |
|---|---|---|
| Primary source | Invoices, receipts and source documents | Bank statement / bank transactions |
| Invoices | Primary accounting record | Optional/supporting evidence |
| Bank | Matches and reconciles against document-led postings; bank-only coding available for confirmed missing documents | Primary coding and posting route |
| VAT | Standard or Cash VAT, subject to client configuration; FRS invoice/cash workflows where applicable | Cash VAT only; FRS cash turnover where applicable |
| Missing documents | Request first; staff may invoke bank-only coding after client confirmation | Code from bank evidence, attaching supporting evidence when available |
| Goal | Document-complete ledgers with bank settlement/reconciliation | Efficient bank-primary bookkeeping with controlled coding |
Common controls in both modes
- Balanced double entry.
- Controlled opening balances and subledgers.
- Bank reconciliation with running balances and difference checks.
- Customer/supplier allocation where those ledgers are used.
- Audit trail, controlled corrections and staff review.
- Reports and year-end schedules from the posted accounting record.