> ## Documentation Index
> Fetch the complete documentation index at: https://cashflowy.ai/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Categorize Your Transactions

> Cashflowy automatically categorizes your imported transactions. Any that need review will appear under the uncategorized warning banner on the Transactions page.

## How to categorize a transaction

<Steps>
  <Step title="Go to Transactions">
    Navigate to **Banking** → **Transactions** in the sidebar.
  </Step>

  <Step title="Find uncategorized items">
    Look for the warning banner that tells you how many transactions need categorization. You can also filter by account, date range, category, or search by merchant name.
  </Step>

  <Step title="Select a category">
    Click the **Category** dropdown on the transaction row and choose the right category from your chart of accounts. Categories are organized in a tree: main categories → subcategories → sub-subcategories.
  </Step>
</Steps>

## How AI categorization works

Cashflowy's AI (Clara) automatically suggests categories for your transactions based on merchant name, description, and past corrections. You can accept a suggestion or override it by picking a different category from the dropdown. The AI learns from your corrections over time, so categorization gets more accurate the more you use it.

<Tip>
  **This can save you hours.** If you have 50 "STARBUCKS" transactions, categorize one and autocategorize the rest. Do this for your top merchants first and you'll clear most of your backlog in minutes.
</Tip>

## Tips for staying on top of it

* **Spend 5–10 minutes weekly** reviewing new uncategorized transactions
* **Create custom categories** in the [Chart of Accounts](/banking/chart-of-accounts) if the defaults don't fit your business
* **Accurate categories = accurate reports** — your P\&L and Balance Sheet are only as good as your categorization

<Warning>
  Uncategorized transactions won't appear correctly in your financial reports. Keep that warning banner at zero for the most accurate picture of your business.
</Warning>