Tips for Automatically Categorizing Sales Transactions – Cheqbook Support

Before we start, make sure you understand this article: How the Blue Categorization Engine works (Mapping!)

These are the most commonly used methods for helping the Blue Engine categorize your sales transactions automatically:

Using Invoicing in Cheqbook (which categorizes for you).
Accepting payments by different means: i.e. PayPal, credit card, and check - all of which appear differently when downloaded from the bank.
Or just accepting that these will always need human intervention, and leaving them "Uncategorized" until you get to them.

An example is probably the best way to explain these options. Suppose you needed to categorize your retail sales differently from your wholesale ones.

If all of your sales transactions are invoiced in Cheqbook, then this is easily accomplished. Since each item you invoice is mapped to a particular income account, when you create a customer invoice it's already categorized for you. Just create two items in Cheqbook for the same product. One is at retail price and categorized to retail sales, the other is at wholesale price and categorized as wholesale sales.

This method isn't practical for businesses that don't always invoice their customers, like a business that also has a retail operation with a cash register. In those cases deposits usually hit the bank from more than one source: physical paper deposits of checks and cash, the daily credit card merchant deposit, and perhaps a third source like PayPal.

Despite this mix many companies find that there is alignment between the deposit types and the retail or wholesale categories. For example PayPal and/or your credit card payments may be entirely retail. If that's true for your business then just set the default category for those transactions to retail sales.

For bank deposits of cash and checks (which are likely to be a mix of retail and wholesale) there's always the traditional method: you categorize it yourself. Remember Cheqbook doesn't promise to handle higher accounting functions, it just replaces the drudgery of data entry. You still have to invoice your customers, pay bills by printing checks, and reconcile accounts. So if your bank deposits are a mix of wholesale and retail, you may have to visit each one and split the revenue between the two.

Possible approach: we've also seen aggressive users setup separate bank accounts. They make one category of deposits (retail) into one account, and other types of income (wholesale) into a separate one. This method can be assisted with Cheqbook's ability in Advanced Categorization* to categorize the same vendor differently depending on the deposit account (*not yet active as of 11/20/12). We're not sure yet if this actually saves time, but it's another option to consider for your business.