How to categorize transactions in your Mercury business account

About categories

Categories are optional labels that can be used to group transactions to provide you better insights. When you apply categories to transactions, you can easily filter them to see how much your company spent on Travel or on Software, for example.

Creating categories

On the Transactions page:

1. Navigate to Transactions
2. Open the drop down on any transaction
3. Click Add category
4. Enter the name of the category and choose where employees will see them: for reimbursements, card spend, or other transactions (eg. ACH payments, Wires etc)
5. Hit Save

In Settings:

1. Click on your company name in the left-hand corner of your dashboard and click Settings
2. Select Categories from the left hand side bar
3. Click on Create Category
4. Enter the name of the category and choose where employees will see them: for reimbursements, card spend, or other transactions (eg. ACH payments, Wires etc)
5. Hit Save

Editing categories

1. Navigate to Categories
2. Click on the pencil icon for the existing category you’d like to edit
3. Make the necessary edits and select Save

Edited category names will update across all previously categorized transactions

Deleting categories

1. Navigate to Categories
2. Click on the trash icon for the category you’d like to delete
3. Select Yes, Delete and you’re all set

Deleted categories won’t be available for future transactions, but will remain assigned to historical transactions. 

Applying categories to transactions

Automated categorization 

We use AI to automatically suggest categories for your transactions - they will be indicated with a sparkle icon. You can always override the suggested category by clicking on the dropdown and selecting a new input. Our system will learn from your interactions and improve the quality of our recommendations.

We will automate categorization for as many transactions as we can, based on historical precedent.

On the transactions page for all transactions

1. Navigate to Transactions
2. Click the transaction to categorize
3. Select the category from the Category dropdown
4. Fill out the other details as needed
5. Exit the transaction

When submitting reimbursements

1. Navigate to Reimbursements
2. Click on Submit Expense
3. Select the category from the Expense Category dropdown
4. Fill out the rest of the details
5. Click Review
6. Select Submit 

On the accounting page

1. Navigate to Accounting
2. Go to the Category column and select the category from the dropdown
3. Fill out the other details as needed
    

About GL codes

GL codes are standardized codes used in accounting systems to classify and record every financial transaction. They correspond directly to your company’s Chart of Accounts and are essential for generating accurate financial statements like the balance sheet or income statement. For accounting and tax filings purposes, every single transaction must have a GL code.

When you integrate Mercury to QuickBooks, Xero, or NetSuite, we automatically pull in your GL codes.

Applying GL codes to transactions

The GL code column is automatically surfaced on your Accounting and Transactions page when you integrate Mercury to QuickBooks, Xero, or Netsuite.

GL codes can then be applied to transactions in different ways:

1 - Automated categorization

Customers with enriched categorization enabled will see accounting GL code columns pre-filled with a GL code suggested by Mercury - it will be indicated with a sparkle icon. This suggested GL code is a prediction based on your previous categorization behavior and will improve over time, as you interact with the feature.

You can always override the suggested GL code by clicking on the dropdown and selecting a new input. To accept the suggestion, simply select transaction(s) to “Mark as Ready” and then sync to your accounting tool.

2 - Categorization rules

You can also manually create categorization rules that consistently apply a specified GL code based on the information Mercury has about the transaction. You will be prompted to set up these rules when you first integrate your accounting software with Mercury. You can also update or edit these rules at any time by navigating to the Accounting page and selecting the gear icon in the top right to access your categorization rules.

Categorization rules can be created for the following attributes, listing in order of priority:

1. Category - automate based on the custom categories you apply to transactions yourself
2. Counterparty (merchant, customers or recipients) - automate based on who you are paying, or awaiting payment from
3. Team member - automate transactions from a specific employee
4. Card - automate based on the specific debit or credit card used for the transaction
5. Merchant type - the vendor type that detect automatically

Note: Categorization rules based on merchants will only be applied to card transactions

All categorization rules apply to future transactions versus historic ones.

3 - Manual categorization

Admin and Accountant users can manually apply GL codes to transactions on the Accounting page. Choose a category from the dropdown for a single transaction, or select multiple transactions (up to 100 per page) to apply categories in bulk using the action bar at the bottom of the screen.

Excluding transactions from review

There might be some transactions that you prefer to categorize outside of Mercury and not see on the Accounting page. To help reduce clutter, we have the “Exclude from Review” action, which you can use in the below ways: 

• On the Accounting page, select either an individual or multiple transactions and apply the “exclude from review” action
• Under categorization rules, choose “exclude from review” as the output of a rule instead of a GL code. When a transaction with the specified parameters comes in, it will be excluded from the default Accounting page view 

Transactions that are excluded from review will be visible in your accounting software, but not in the “needs review” and “sync” flow on Mercury. 

To see all excluded transactions, navigate to Add Filter > Status > Excluded from review. To bring a transaction(s) back to your “Needs review” filter, select the applicable transaction(s) from this view, and click on “Include in review” under the actions menu.

Syncing transactions to the accounting software

Admin and Accountant users will be able to sync the expense records directly to Xero, QuickBooks Online, or NetSuite from the Accounting page. If you aren’t connected to one of these accounting softwares, you may also export transactions (including categories) in CSV form to be uploaded to accounting software of your choice. You can learn more about syncing transactions here. 

Using categories in conjunction with GL codes

Categories can be mapped to GL codes for accounting purposes. If one of your categories is always mapped to a specific GL code, you can create a rule to do that automatically to every future transaction. With categorization rules in place, GL codes will be automatically applied to each transaction once a category is set, which you can review on the Accounting page before syncing transactions to your accounting tool.

1. Navigate to Accounting
2. Click on the gear near the upper right corner to open your accounting settings
3. Click Create a Rule to get started
    

FAQs

What does it cost to sync transaction details on the Accounting page to my accounting software?

QuickBooks and Xero enriched automations, as well as the ability to import bank feed connections across QuickBooks, Xero, and NetSuite, are free. If you want to use our enriched NetSuite accounting integrations and automations to sync your card transactions to NetSuite, you’ll want to upgrade to a paid plan. Other IO card features are still free to use.

Learn more about pricing here.

What type of transactions can be mapped, categorized, and synced from the Accounting page?

The accounting page surfaces all incoming and outgoing transactions, with the exception of internal transfers.

If I create a categorization rule, will it impact past transactions?

Not necessarily. Categorization rules will generally only impact transactions that come through after the rule has been created. However, manually updating the Mercury Category on a past transaction will trigger the mapping engine to run and update the GL code if applicable.

How can I tell if a transaction has been auto-categorized?

When a categorization is auto-categorized, you will see a sparkles icon next to the Category and/or GL code.

How does automated categorization interact with categorization rules?

Both tools work hand in hand to automate and speed up your categorization. When a transaction comes in, if its attributes are eligible for a categorization rule, then the GL code output will come from that categorization rule. If not, then we will proceed with our model predictions and suggest a category based on similar transactions. If you do not have any categorization rules set up, then we will run all your transactions through our predictive model.

What happens when I nudge a cardholder?

When you nudge a cardholder via the action column, the cardholder will receive an email reminding them to update the transaction with any required information that is missing, specifically a receipt and/or Mercury Category.

Mercury is a fintech company, not an FDIC-insured bank. Banking services provided through Choice Financial Group and Column N.A., Members FDIC.