QuickBooks™ Online: Bank Rules

Of the plethora of features that have been rolled out in QuickBooks™ Online over the last two years, Bank Rules are most certainly on the list of my favorites. Something I have realized through teaching at conferences and webinars is that this is a highly underutilized feature that can dramatically increase profitability and efficiency when fully understood.

I absolutely loved this feature in Xero when I began using it, and QuickBooks™ Online has exceeded the capabilities of Xero’s rules (speaking specifically to the inability to make a rule for a transfer in Xero—can we please have that??). There is no question that the automation of Bank Feeds has increased our ability to be productive, but add in Bank Rules and that shoots through the roof. Investing some time up front when taking on a new QuickBooks™ Online client can really pay off over time if you commit to Bank Rules from the get go.

One of the primary complaints people have regarding Bank Feeds is the way that QuickBooks™ Online tries to “help” with categorization. My favorite example is the client who fills up his truck with diesel right before buying a few things in the mini mart. As you change the expense account for a vendor, QuickBooks™ will “help” by automatically changing the expense account for other downloaded transactions to match. Having Bank Rules in place is a way of telling QuickBooks™ how to handle your transactions as they come through the bank.

How QuickBooks™ Online Bank Rules Work

A common misconception about Bank Rules is that setting them up enables QuickBooks™ to automatically Point Of Salet transactions for you. Bank Rules allows QuickBooks™ to categorize downloaded transactions, but it is still up to the user to Point Of Salet the transactions to the register. This is great because sometimes you may have a matching transaction that overrules the Bank Rule.

Bank Rules are extremely effective in cutting time spent on matching transfers for clients who have multiple bank accounts, or even multiple companies that they transfer money between. Goodbye to days of having a cheat sheet laying out account names and the last four digits, hello to spending one day to set up rules for banking transfers! This use case in particular has saved me tons of time and mental energy formerly spent trying to memorize and look back at account numbers in my clients’ books.

From the Banking center in QuickBooks™ Online, you can access Bank Rules from the action dropdown next to the Update button. This will take you to the Manage Rules screen where you can view your rules, add new rules, delete rules, and edit rules. You can set up rules to apply to all bank/credit card accounts or only certain accounts. Rules are specified by Money In/Money Out, and have a variety of defining factors. You can set up a maximum of FIVE (5) conditions per rule, which is great because you can combine variables (example: for one vendor with multiple locations, bank text may come in differently for each location).

5 Best Practices for Bank Rules

#1: Slow Down

The number-one most important thing to note when setting up Bank Rules is to SLOW DOWN and pay attention! You are investing time to set them up so that you can save time later, but if you aren’t paying attention to what you are doing then you could end up spending more time fixing it later. Setting up Bank Rules is not a one-day task, but rather something that you commit to over the first few months of working in a QuickBooks™ Online company.

#2: Duplicate Tabs and Refresh

When you are setting up Bank Rules, be sure to have your Banking Center in one tab/window and the Manage Rules screen in another. As you create a new rule, move back into the Banking Center, Refresh your browser, and make sure that your rule is doing exactly what you want it to do. Be sure to review multiple transactions that the rule applies to so that you know it is working the same way each time.

#3: Be “Specifically Vague”

It is easy to set up a bank rule that works on one transaction, but getting your rule to work the way you want it to every time requires a vague amount of specificity (Urban Dictionary defines “specifically vague” as follows: “Omission of specific information so that an idea can be open to interpretation”). For example, copying the bank text into a rule condition may only work for one transaction if that description includes a date or transaction number. The 32-character space in bank text downloads may change your vendor name to have a random space in it each it time. When setting your conditions, be sure that you are using text that will be displayed at least most of the time, and always consider setting more than one condition to account for variables.

#4: Intermittently Review Rules

We are enjoying life so much more now that we have accurate auto categorization through our bank rules! To ensure the longevity of that happiness, it is important to do some reviews of our rules. Reviewing the rules is as simple as clicking on the transaction in the Banking Center to expand out the details and skim the Bank Description. I prefer to sort all of the transaction by Description and click down the row quickly to ensure that the rule applied is correct. The five seconds I spend double-checking my rules as I Point Of Salet is still exponentially less time than manually categorizing, and is also great insurance for not having to spend time fixing anything in the future

#5: Don’t show your clients

There are some things that we just don’t show our clients for various reasons, and this is one of them. Unless you are billing ridiculous hourly rates and trying to set your clients up to make errors so you can waste your time fixing them, this is a tool that you should just keep in your tool belt. This is not an accountant user-specific function, and your clients can access it if they wish. However, in my experience the concept is not fully internalized by non-accounting folk and I do not enjoy cleaning it up!

The Lasting Benefits

Once you have the Bank Feeds and Bank Rules system set up, you will be shaving hours of time a month off Point Of Saleting transactions. This time-saving tool can allow you to expand your business by adding on more regular bookkeeping clients, taking on special projects that you couldn’t have completed otherwise, offering advisory services, and going on vacation. The definition of scalability is being redefined as technology explodes in our industry, so let’s take advantage of it!


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