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# How automatic categorization and review work

Every bank transaction needs a category: the account that says what the money was for, such as Office Supplies, Rent or Sales. Categories are what turn a list of payments into a profit and loss report, so you can see what you earned and where it went. BooksGPT suggests a category for each transaction as it arrives, and you approve it.

${youtube}[Watch: How to categorize transactions and create rules in BooksGPT](6_ihl0UW_Us)

## What happens when a transaction arrives

BooksGPT works through these in order:

1. **A payment to one of your credit cards.** Paying a card is not an expense: it moves money from your bank to the card. BooksGPT suggests a transfer to that card. Money moved between two of your own accounts is a transfer too, never income or expense. See [Transfers, credit-card payments, and owner draws](https://help.booksgpt.ai/en/article/transfers-credit-card-payments-and-owner-draws-15sx6bu/).
2. **Your rules.** A rule says, for example, always file The Home Depot as Materials. See [Categorization rules: teach it once](https://help.booksgpt.ai/en/article/categorization-rules-teach-it-once-1swy0og/).
3. **AI**, for everything else. It picks an account from your chart of accounts and says how sure it is.

Until you approve it, most money already sits in your books in **Uncategorized Expense** or **Uncategorized Income**, so your bank balance counts it. Your profit and loss just cannot say what it was for yet. A few, such as card payments and possible duplicates on hold, stay out of your books until you decide them.

|| AI suggestions need a paid BooksGPT seat. Without one, your rules still run.

## Choose how much AI does

1. Click **Settings** at the bottom of the left sidebar, then **AI preferences**. (**All pages**, then **Accounting** and **Categorization**, opens the same place.)
2. Under **Categorization**, choose one:
   - **Off**: transactions import and your rules run, but AI suggests nothing until you ask it to.
   - **Suggest** (the default): AI fills in a category on each transaction, and you approve it.
   - **Auto-post above a threshold**: AI files a transaction itself when it is sure enough. Everything else waits for you.
3. If you chose auto-post, click **Turn on auto-post** to confirm. Then drag the slider to set how sure AI must be, from 50% to 99%. The default is 85%.

![Settings, AI preferences: the Categorization card with Auto-post above a threshold chosen and its slider at 85%](https://booksgpt.ai/help/categorization/ai-preferences-v2.png)

Only a workspace owner or bookkeeper can change this. A new mode applies to new transactions; anything already waiting stays for you to approve.

Auto-post has floors you cannot lower. Whatever the slider says, BooksGPT auto-posts an expense only when it is at least 85% sure, and income, tax, transfers and card payments only at 95%.

## Approve what BooksGPT suggests

You approve suggestions in the Review inbox, your to-do list for new transactions.

1. Open **All pages** in the left sidebar, then click **Daily work** and [Review inbox](https://app.booksgpt.ai/go/inbox).
2. Under **Ready to post**, check the category on each row. A green sparkle means BooksGPT suggested it. Click the category to see how sure BooksGPT is, under **Suggested**, or to pick a different account.
3. Click the green circle at the end of the row to approve it, or **Approve & post all** to approve every row on the tab.

![The Review inbox, with the category list open on a Brightline Software row: Suggested shows 6700 Software & Subscriptions at 96%](https://booksgpt.ai/help/categorization/inbox-suggested-v1.png)

When you change a category, BooksGPT may offer **Remember this choice**, so the next transaction from that merchant is filed the same way.

[Review the inbox and file Uncategorized transactions](https://help.booksgpt.ai/en/article/review-the-inbox-and-file-uncategorized-transactions-7klseh/) walks through every tab, including rows that need a category and rows on hold. To have Copilot categorize a batch for you, see [Review what Copilot suggests](https://help.booksgpt.ai/en/article/review-what-copilot-suggests-1ox2ljh/).

## What your books say after you approve

Say a $42.00 charge from Northstar Stationery comes out of your checking account:

- **When it arrives**, checking goes down by $42.00 and Uncategorized Expense goes up by $42.00.
- **When you approve it** as Office Supplies, the $42.00 moves from Uncategorized Expense to Office Supplies. Checking does not change again.

Approving moves the money to the right account. It never counts it twice.

## If you already recorded the payment

Sometimes the money is in your books before the bank transaction arrives: you recorded a customer's payment on an invoice, paid a bill, or a recurring entry posted the rent. Then the bank transaction is the same money, so match it instead of approving it.

||| Approving a bank transaction for money you already recorded counts that money twice. Match it instead.

- **In the Review inbox**, such a row says **In your books**. Click **Match**.
- **Otherwise**, open **All pages**, then click **Daily work** and [Transactions](https://app.booksgpt.ai/go/transactions). Click the arrow at the end of the bank transaction's row, then **Match to existing entry**. Pick the entry, check its name, date and reference, and click **Match entry**.

![Match to existing entry for an $850.00 payment to Jordan Lee: the Suggested match, Contract work, Jordan Lee, is selected and Match entry is ready](https://booksgpt.ai/help/categorization/match-entry-v1.png)

The entry you recorded stays as it is, and the bank transaction is marked reviewed. Only an owner or bookkeeper can match. Once you match one payment of a recurring entry, BooksGPT matches the next ones itself when exactly one bank payment fits.

## If something goes wrong

- **AI stopped categorizing a bank's transactions.** Someone may have clicked **Stop auto-categorizing** during an import. Open **Settings**, then **AI preferences**, and click **Resume AI on imports**. Choosing a mode does not restart it.
- **A bank's transactions arrive with no suggestions.** It was brought in with **Just import**. Open [Banking](https://app.booksgpt.ai/go/banking), click the three dots on that bank's row, and click **Run AI now**.
- **You approved the bank transaction before matching it.** BooksGPT will not match an approved transaction. In **Transactions**, open its category list, choose **Clear category**, then match it.
- **You approved the wrong category.** See [Fix or change a transaction's category](https://help.booksgpt.ai/en/article/fix-or-change-a-transactions-category-1pgpd2b/).