This article explains how the 'Guess' feature attempts to automatically explain your bank transactions in FreeAgent.
Guess is a FreeAgent feature that, when switched on, attempts to automatically explain transactions based on existing information in your FreeAgent account.
Guess has been enhanced with machine learning algorithms that can automatically categorise new bank transactions. Guess does this by identifying the relationship between a transaction's description and the category applied across your other FreeAgent explanations with similar descriptions.
For example, Guess might see that you typically explain Costa Coffee transactions using the ‘Accommodation and Meals’ category, so if FreeAgent detects a Costa Coffee transaction imported into your account, Guess will automatically suggest an explanation of ‘Accommodation and Meals’ to help save you time.
To correctly guess these explanations, FreeAgent works through the following rules. As soon as it finds a match, it will apply the matching explanation and move on to the next transaction. If it doesn’t find a match, the transaction will remain unexplained. Transactions that import through a bank feed and are explained by Guess will be marked for approval and appear in orange in your FreeAgent bank account.
If the explanation isn’t correct, but Guess has identified more than one category as a possible explanation for the transaction, FreeAgent will present these alternatives when you select a different category. For information on how to approve or correct a guessed explanation, please see this article.
1. Matching manually added transactions
First, Guess looks for any transactions that you’ve manually added in the same bank account, with the same date (±1 day) and the same amount as the imported transaction.
If Guess finds a match, it merges the imported transaction with the manual transaction to avoid duplication in your account. Please note that Guess will ignore any manual transactions that are locked.
2. Matching transactions from PayPal
If Guess was unable to find a matching manual transaction, it moves on to the next set of rules. If the imported transaction is from PayPal, the following rules are triggered:
- If there is an invoice or credit note in FreeAgent that has been paid using PayPal, Guess marks the payment as withdrawn and allocates the transaction to the invoice or credit note.
- The fee from any PayPal transaction will be automatically explained as ‘Bank/Finance Charges’. Please note that this rule won't be included in an unincorporated landlord account.
If you receive recurring payments from your customers and would like these to be explained automatically by Guess, you can add an income category named ‘Subscription Income’ for example. Guess will then explain ‘Web Accept Payment Received’, ‘PayPal Express Checkout Payment Received’, or ‘Website Payments Pro API Solution’ transactions using that ‘Subscription Income’ category.
3. Money transferred between your accounts
If the transaction hasn't been guessed yet, Guess will attempt to find an unexplained transaction in a different bank account with the same value as the imported transaction. For example, if it’s a ‘Money Out’ transaction, the unexplained transaction that Guess is looking for needs to be a ‘Money In’ transaction dated between five days before and eight days after the date of the imported transaction.
If a match is found, Guess explains the imported transaction as a transfer between the appropriate bank accounts.
4. Paying off invoices and credit notes
Next, Guess will look for any non-PayPal invoices or credit notes that match the imported transaction. This also applies to partially paid invoices or credit notes. Please note that Guess will ignore any invoices and credit notes that are dated before the FreeAgent start date.
Guess looks for any open invoices or credits notes dated within three months prior to the transaction date, and with a matching outstanding amount. If it finds a single matching invoice, Guess will explain the imported transaction as an ‘Invoice Receipt’ or ‘Credit Note Refund’, and will mark the invoice or credit note as paid. If Guess finds multiple matching invoices, it leaves the transaction unexplained so that the transaction isn’t allocated to the wrong invoice or credit note.
Please note that Guess will currently not match any invoices, or recurring invoices, that have automatic thank you emails enabled to ensure that these emails aren’t sent to the wrong customer.
5. Paying off bills and bill refunds
If Guess hasn’t found any matching invoices or credit notes, it will look for outstanding bills and bill refunds. This also applies to partially paid bills. Please note that Guess will ignore any bills from before the FreeAgent start date.
Guess looks for any open bills dated within three months prior to the transaction date, and with a matching outstanding amount. If it finds a single match, Guess will explain the imported transaction as a ‘Bill Payment’ or ‘Bill Refund’, and will mark the bill as paid. If Guess finds multiple matching bills, it leaves the transaction unexplained so that the transaction isn’t allocated to the wrong bill.
6. Similarly explained transactions
Finally, Guess will attempt to explain the imported transaction based on previous explanations of similar transactions, using the following criteria:
- Transactions will be matched based on descriptions while ignoring any digits, month names or abbreviations
- Faster payment (FP) references will be ignored
- It will only consider matches on the latest 10,000 transactions in the bank account
- It will only match money in to money in, and money out to money out
- Previously guessed explanations that are marked for review will be ignored
If a match is made, Guess explains the imported transaction with the same category and exact description as the matched transaction. If there are several matches, Guess chooses the most recent one. Guess will also link the transaction to a project and rebill it at a set amount or rate if the previous matched transaction was linked.
Please note that not all transactions can be guessed using the similarly explained transaction rule. If an imported transaction has any of the following attributes it will be ignored:
Transaction description starts with:
- CCID CREDIT
- CHQ UNCLEARED
- CARD PAYMENT ON
- AMAZON *MKPLACE EU LUXEMBOURG AM
- Visa Sales Amazon Eu
- ELECTRONIC BANKING
- Paypal Payment
Some transaction explanations don’t make sense to repeat, such as payment of a particular invoice. As a result, the following types of transaction explanation will not be repeated by Guess:
- ‘Transfer from Another Account’
- ‘Transfer to Another Account’
- 'Invoice Receipt'
- 'Credit Note Refund'
- 'Bill Payment'
- 'Bill Refund'
- ‘Disposal of Capital Asset’