Rules and categories

Understanding transactions and automated categories

Andrew Robinson avatar
Written by Andrew Robinson
Updated over a week ago

Within Puzzle, several different types of Rules can suggest Categories for Transactions. You can also manually change Categories for Transactions. Here’s how it works.

The Role of Transactions and Categories in Puzzle

To understand what Rules do and why they are important, consider where they fit in to the overall data flow within Puzzle.

Summary: Rules auto-suggest Categories for new items in the Transactions feed. Once applied (and modified by users, if needed), these Categories allow Puzzle to transform the Transactions into an accurate General Ledger, which allow you to create accounting Financial Statements.

Everything in Puzzle starts with the Transaction feed, which is a combination of data from all your company’s integrations, including banks, credit cards, payroll, and payment processors. Each transaction represents a distinct event.

In order to create accounting records, each Transaction will have a Category applied to it. Certain Categories may be automatically suggested based on Rules.

The Category allows Puzzle to interpret how to treat each transaction for accounting purposes. Based on the Categories, Puzzle transforms your Transaction feed in real-time into a General Ledger, which applies double-entry accounting to each transaction (but allows you to skip making these journal entries yourself!).

The General Ledger is the standard log for all accounting entries that is transformed into Financial Statements, which aggregate your General Ledger into standard accounting output.

How Rules Suggest Categories for Transactions

The Transaction feed within Puzzle is a real-time listing that constantly updates for new transaction data from account integrations.

When a new transaction record comes into the Transaction feed, two things could happen:

The Category is auto-assigned based on a Rule

No Category is assigned because there is no Rule that Puzzle has identified for this transaction; this will show up as “No Category”

Within Puzzle, there are several types of Rules with different levels of priority (i.e. to determine which one takes precedence when they conflict). Here is an explanation of each type, listed from highest to lowest priority:

Type 1*: Rules that are based on linked transactions between multiple systems (e.g. credit card payment that will show up in your transactions for both credit card and bank activity)*

Type 2: Rules explicitly created by your company applied to your company’s transactions (This guide explains how to create a rule.)

Type 3: Rules that Puzzle generates applied to your company’s transactions based on how your company has categorized a transaction with a matching (or similar) description in the past. These are referred to as “Puzzlebot rules.”

Type 4: Rules that Puzzle generates applied to all companies’ transactions based on how other companies have categorized a transaction with a matching (or similar) description in the past

Type 5: Rules created by a Puzzle employee applied to all companies’ transactions based on reviews of common transactions

*Note that Type 1 Rules cannot currently be overridden within Puzzle. If you believe there are errors with the Category applied to a transaction with a Type 1 Rule, please reach out to [email protected]; we can help you ensure everything is correct!

Overriding Rule-Based Suggestions

If you want to change the Category suggested by a Rule (types 2-5), you can override by changing the Category before marking the transaction as “Finalized.” You can also override any type 3-5 rules that provide an incorrect category suggestion by creating a company-specific type 2 rule for those transactions.

Puzzle’s ability to create Rules that accurately apply a Category to each Transaction will constantly improve as the system learns from additional transactions and user-based application of Categories.

For any further questions about how Rules work, why a Rule was applied to a specific transaction, or why you cannot change a category, reach out to [email protected] — we’re here to help demystify the process!

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