Is it a good idea to set up automatic bank allocation rules in my accounting software? Here are a few of the potential pros and cons.

• Positivies of setting up bank rules:
  • Saves a lot of time. Especially with regular, unchanging and obvious transaction allocations such as monthly bank charges or subscription fees. Making Time for more important things like understanding your financial reports.
  • Reduces human error because you only have to choose the correct account allocation details once.
  • You can add new rules as you go along and find more repeating transactions.
  • The rules can be set up for a range of amounts, so you don’t have to know the exact charge up front. (For example: with itemised phone bills , you only have to look at amounts that are higher than a certain threshold)
  • Bank rules can be set up to automatically allocated transactions, or to suggest an allocation and require your acceptance. This extra step can be helpful as you test out your rules and check you made no mistakes in their set up.
  • You can set a rule up by copying a transaction you are currently allocating, so it is quick to do and easy to check.
• Potential negatives of automatic bank rules:
  • If you make a mistake when creating the rule (eg: select the incorrect account to allocate the cost to), it will repeat this error every time this transaction appears on the bank statement. This is, however, generally easy to fix once detected.
  • You can only set up bank rules if you are automatically downloading the bank transactions from your bank. Automatic bank downloads is something that we heartily recommend; both as a time saver and an manual error reducer – Making Time for more important things.
  • Some transactions are too complicated to be automated, so there will always be a few that need to be manually allocated.

Happy allocating.