Bank rule (bank feed rule)
Definition
A bank rule is an automated instruction in accounting software that categorizes imported bank or card transactions based on conditions such as payee, description, or amount. When a transaction matches the rule, it is assigned the preset account, contact, or tax treatment automatically.
Why it matters
Bank rules save time by handling recurring transactions like rent, subscriptions, and utilities without manual coding. They also make categorization consistent, though rules should be reviewed so mistakes are not repeated automatically.
Example
A business pays $49 every month to a software vendor whose bank description contains "CLOUDAPP". A rule says: if the description contains "CLOUDAPP", categorize to Software subscriptions. Each month the feed transaction is recorded as debit Software subscriptions $49, credit Cash $49.
Common questions
Can bank rules make mistakes?
Yes. A rule with conditions that are too broad can miscategorize unrelated transactions, so it is good practice to review auto-categorized items periodically.
Can a bank rule split one transaction across accounts?
Many accounting systems allow rules to split a transaction by percentage or fixed amount, for example dividing a bill between two expense accounts.
Related Terms in Core Accounting
Continuous close
Continuous close is an approach to accounting where reconciliations, categorization, and adjustments are performed throughout the period rather than all at once at month end. The goal is to keep the books close to final at any point so the formal close takes much less time.
Accrued Expenses
Costs a business has incurred but not yet been billed for or paid, recorded as a liability so the expense lands in the period it belongs to. Typical examples are wages earned but unpaid at month end, interest, and utilities consumed before the invoice arrives. Reversed when the actual bill is booked.
Accrued Revenue
Revenue earned by delivering goods or services that has not yet been invoiced to the customer, recorded as an asset. Common on milestone contracts and retainers where work is performed in one period and billed in the next. The opposite situation to deferred revenue.
Allowance for Doubtful Accounts
A contra-asset account that reduces accounts receivable by the portion management expects never to collect. Estimated from historical loss rates or an aging analysis, it keeps receivables stated at realisable value instead of face value. Also called the provision for bad debts.
Stop memorising terms — let HelloBooks do the work
AI-assisted bookkeeping that handles invoicing, GST, reconciliations, and reports automatically. Free to start.