Spend classification
How to automate spend classification across multiple data sources
Accurately classifying spend is critical for organizations seeking better visibility into expenditures. When transactions go unclassified or fall into miscellaneous GL accounts, finance teams struggle to analyze trends, control costs, and negotiate vendor contracts. The challenge grows when data is spread across invoices, corporate cards, and bank transactions, making validation time-consuming and delaying the month-end close.
With Parabola, teams can centralize and standardize spend data by pulling in records from multiple sources, automatically mapping expenses to GL accounts and cost categories, and leveraging AI-driven classification. This automation helps detect discrepancies faster, reduce manual reconciliation, and accelerate financial close.
Video overview
Why Parabola
In a world where efficiency is a key contributor to effectiveness, Parabola provides an unlock for businesses of all sizes in synthesizing large volumes of information into key insights."
Spend classification is the process of organizing expenses by cost categories and GL accounts to improve financial reporting accuracy and enable better cost control. Traditionally, spend classification relies on rule-based logic, but modern teams increasingly use AI to categorize costs with greater precision. AI-driven classification helps identify patterns, adapt to evolving expense structures, and reduce manual effort, making financial reporting more accurate and efficient.
- Pull spend data from various sources, such as corporate card statements, PDF invoices, and bank transactions using steps like Pull from inbound email, Pull from PDF file, or Pull from CSV file.
- If classifying expenses into GL accounts, also pull in your spend tree using the Pull from CSV file step.
- Clean and standardize vendor and line-item descriptions using steps like Edit Columns, Find and Replace, and Standardize with AI.
- Join data across sources based on values like expense categories, GL codes, and credit card codes using the Combine tables step.
- Apply AI-powered classification using the Categorize with AI step to map transactions to GL accounts and spend categories automatically. Fine-tune your categorization by adding example expenses for each category and by providing additional instructions.
- Create a consolidated spend dashboard using the Visualize step, or export your cleaned dataset using a step like Send to Google Sheets or Email a file attachment.
- Standardize vendor names and expense descriptions early in your flow to improve classification accuracy.
- Provide example values and additional instructions to AI steps to improve automatic categorization.
- Set up automated exception reports to flag uncategorized or mismatched transactions.
- Regularly review and refine classification rules to ensure alignment with changing business needs.
- To start building your spend classification Flow, use the Template above and check out Parabola University.
