> For the complete documentation index, see [llms.txt](https://now-8.gitbook.io/now.-features/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://now-8.gitbook.io/now.-features/banking/ai-auto-categorization.md).

# AI Auto-Categorization

now. uses AI to categorize your transactions for you. After every bank sync, the AI scans new transactions, identifies the merchant, and assigns the right account from your Chart of Accounts — but only when it's confident enough.

#### How It Works

1. New transactions arrive from your bank.
2. The AI reads the bank description, the merchant name, the amount, and any hints provided by Plaid.
3. It compares what it sees against your existing Chart of Accounts and your prior categorizations of similar transactions.
4. If the AI is **95% confident or higher**, it categorizes the transaction automatically. The transaction moves to **Categorized** with the right account, vendor, and (when relevant) customer.
5. If confidence is below 95%, the transaction stays in **Needs Review** for you to handle manually. now. never guesses.

#### What the AI Categorizes

* Recurring bills (subscriptions, utilities, rent)
* Common business expenses (office supplies, software, meals, travel, advertising)
* Income from recognizable customers
* Vendor payments where the merchant is clear

#### What the AI Skips

The AI intentionally leaves these for your review:

* Transfers between your own accounts
* ATM withdrawals
* Wire transfers
* Loan payments
* Unknown ACH transactions with no identifiable payee
* Anything where confidence is below 95%

For these cases, the transaction lands in **Needs Review** and you decide.

#### Auto-Created Vendors and Customers

When the AI categorizes a transaction, it often identifies the merchant by name and creates a vendor or customer record automatically:

* **Expenses** create a vendor.
* **Income** creates a customer.

You can rename, archive, or delete these later. See Vendors and Customers.

#### Learning from You

When you manually categorize a transaction, now. remembers the pattern and applies it to similar transactions in the future. Over time the AI gets better at the way *you* keep your books.

Categorization is strictly scoped to your own account. No categorization decision is ever based on, derived from, or influenced by another user's data — anonymized or otherwise. The AI only sees your own history, your own vendors and customers, your own chart of accounts, a built-in static merchant library, and Plaid's own category hints.

#### What Gets Sent to OpenAI

now. uses OpenAI to power categorization. When the AI runs:

* Transaction descriptions, amounts, and your Chart of Accounts list are sent to OpenAI's API.
* Your bank credentials, full account numbers, and personal identifying details are **not** sent.
* OpenAI processes API data under its enterprise data policies and **does not** use it to train its models.

#### Override Anytime

You're always in charge. Open any categorized transaction and change the payee or account. now. reverses the original journal entry and posts a new one. The AI takes your correction into account on similar transactions going forward.

#### Subscription Required

AI categorization runs only while your subscription is active. If your subscription lapses, new transactions still import but won't be auto-categorized — you can categorize them manually at any time.

#### Cooldown and Batching

To avoid duplicate work, the AI waits 60 seconds between runs and processes new transactions in batches. You don't need to do anything — just pull to refresh and the cycle starts on its own.

#### Related

* Transactions
* Privacy and Data
* Subscriptions


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://now-8.gitbook.io/now.-features/banking/ai-auto-categorization.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.