Optimizing Your Bank Feeds in QuickBooks with Default Expense Categories
Feb 20, 2023Keeping track of the finances for a law firm is an important part of our work as bookkeepers. But it can also be a time consuming and tedious task. Fortunately, there is a way to streamline the process - using bank rules and automated bank feeds in QuickBooks. But … and it is a big BUT…QuickBooks is a pretty poor guesser at the categories. Just the other day, for my own firm, it guessed Adobe as DoorDash. Really? I have seen some interesting “guesses:”
All of the above are incorrect. But when we get client files, people blow through the coding assuming QuickBooks has to be right? It’s AI, right?
Accurate bookkeeping is essential for any of your clients and so relying on the bank feeds. If you use it to your advantage, can be a real time-saver. To ensure accuracy within the accounting program, you might want to consider utilizing default expense categories that are associated with each of your vendors. Let’s take a look at why this is important and how you can set up default expense categories to work with your bank feeds:
Why Use Default Expense Categories?
Default expenses categories are associated with each of your vendors in QuickBooks. When you assign a category to an account, all transactions related to that account will automatically be assigned the same category when they’re imported into QuickBooks via the bank feed. This saves bookkeepers time and helps ensure accuracy by ensuring that all transactions are categorized correctly at import. It is also super-helpful if you work with larger bookkeeping firms and have their paralegal or legal assistant helping code transactions in QuickBooks.
How to Set Up Default Expense Categories In QuickBooks
Setting up default expense categories in QuickBooks is easy. First, log into your QuickBooks account and click on “Accounting” in the top navigation bar. Then, click on “Expenses” and "Vendor" select a vendor name and click the pencil to edit the vendor. In the accounting section (about 2/3 of the way down the page) you will see "default expense category", enter the appropriate information for your account (in my example below, I used apps, software for 17hats as my vendor). Repeat this process for each of your vendors until all have been given a default expense category associated with them.
Using The Default Expense Category For Your Vendors
Once you have set up default expense categories for all of your vendors in QuickBooks, you will notice a big improvement in the "suggestions" in your bank feeds process! This should improve the entire process including having the issue of uncategorized expenses popping up on the bank feed.
Using Bank Rules to Save Time
Bank rules in QuickBooks allow you to categorize transactions based on predetermined criteria. This helps save time by automatically assigning transactions to the correct categories, which can help reduce errors and keep your books organized. With bank rules, you can set up specific criteria such as Vendor Name or Amount that will trigger transactions to be automatically categorized in the right place. There are even conditions you can set to really finesse the books and automate the process. You can even have multiple rules in place at once so that certain transactions are handled differently depending on the time of day or other factors. All of this is demonstrated in the video above.
Also, use the conditions to your benefit to really streamline the process. You can choose the bank account (if the transaction varies by bank account) and you can even change the bank memo to make more sense.
Conclusion
We hope you enjoyed this post about optimizing your bank feeds in QuickBooks. This can be a very helpful tool for anyone who uses QuickBooks and works with attorneys. If you have any more questions or concerns about bank feeds, join our group The Accountant's Law Lab. Thank you for reading, we are always excited when one of our posts is able to provide useful information on a topic like this!
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