Financial Analysis Articles: How to Determine the Direction of a Transaction and Correctly Prepare a Financial Document

In Torgsoft, cash movements are linked to financial analysis categories. These categories help distinguish sales revenue, settlements with suppliers, salaries, bank fees, internal money transfers, and other transactions.

Technical support requests show that users most often encounter difficulties not with creating a financial document itself, but with deciding which category to select and understanding why the software does not allow a transaction to be processed under a particular category.

For example, a user may select an expense category when recording incoming funds and receive a message stating that incoming funds cannot be assigned to an expense category in financial analysis.

What Is a Financial Analysis Category?

A financial analysis category identifies the type of cash movement associated with a transaction.

Torgsoft includes system categories that the software uses for standard transactions. These include:

• Sales Revenue — money received from selling goods;

• Settlements with Suppliers — payments to suppliers;

• Internal Transfers — movement of money within the business;

• Bank Fees;

• Currency Exchange;

• Salary;

• Acquiring.

Users can also create custom categories and make them subcategories of the main ones. For example, under «Salary», separate categories can be created for base salaries, bonuses, or other payments.

Expense and Non-Expense Categories

The category directory includes an option called «Include in Expenses».

When enabled, transactions assigned to this category are treated as business expenses. In the financial analysis category tree, such categories are highlighted in red.

Expenses may include, for example:

• rent;

• utilities;

• advertising;

• salaries;

• banking services.

Amounts assigned to expense categories are taken into account when calculating profit. However, not every cash outflow is a business expense.

For example, paying a supplier reduces the amount of money in the cash register or bank account, but the payment itself should not reduce profit again: the value of the goods is already accounted for through their cost.

Similarly, cash collection or transferring money between the business's own cash registers is not an expense — the money is simply moving within the business.

Balance and Non-Balance Categories

Financial analysis categories are also divided into balance and non-balance categories.

Balance categories affect settlements with counterparties. Under the default settings, these include:

• Sales Revenue;

• Settlements with Suppliers.

Transactions assigned to these categories affect the information displayed in «Balance with Partners» and «Settlement Statement».

Non-balance categories do not change a counterparty's outstanding balance. These may include operating expenses, salaries, banking services, and other transactions unrelated to settlements with customers or suppliers.

In Torgsoft, expense categories and balance categories follow different rules. If a category is designated as a balance category, the «Include in Expenses» option is disabled.

Why Incoming Funds Cannot Be Recorded Under an Expense Category

This is one of the actual reasons users contact technical support.

If money is received in a cash register or bank account, but the user tries to assign the transaction to a category marked as an expense, a logical conflict occurs.

An expense category indicates that the amount is a business expense. Incoming funds, by contrast, increase the amount of money available. Therefore, Torgsoft does not allow such a transaction to be processed.

In this situation, you should not try to bypass the restriction. Instead, check:

1. what actually happened to the money;

2. which category corresponds to the economic nature of the transaction;

3. whether the category itself is configured correctly.

Examples of How to Choose a Category

A customer pays for goods.

The money is received from a sale, so the system category «Sales Revenue» is used.

A business owner pays an outstanding debt to a supplier for goods received.

The money leaves the cash register or bank account, but the transaction is a settlement with a counterparty. The «Settlements with Suppliers» category is used.

This transaction changes the outstanding balance owed to the supplier.

These are business expenses.

They should be assigned to the appropriate non-balance expense category, such as «Rent», «Advertising», or «Utilities».

Torgsoft provides the system category «Salary» for employee payments. Subcategories can be created under it if needed.

When money is transferred between the business's own cash registers or between a cash register and a bank account, it does not become a business expense.

The «Internal Transfers» category is used for such transactions.

The main principle is simple: consider not only whether money physically leaves the cash register, but also the economic nature of the transaction.

What to Do If the Wrong Category Was Selected

First, determine how the financial document was created.

Open Payment → Financial Document and find the relevant transaction by date, cash register, bank account, counterparty, or other available parameters.

Check:

• the amount;

• the cash register or bank account;

• the counterparty;

• the financial analysis category;

• the document or transaction associated with the cash movement.

If the document can be edited, select the correct financial analysis category.

Before making the change, it is important to determine whether the new category should:

• affect expenses;

• affect the balance with a counterparty;

• represent an internal transfer of funds.

Do not immediately delete the financial document or manually create a new one.

If the financial document is linked to a sale, customer payment, supplier settlement, or another primary document, check the original transaction first.

Otherwise, you may correct the financial document while leaving related documents or settlement balances incorrect.

Do not automatically delete documents or reopen a previous cash register day simply to change a category.

First, determine:

• which document created the incorrect cash movement;

• whether it can be edited;

• how the correction will affect subsequent cash register days and reports.

For complex cases involving already closed periods, it is advisable to contact technical support.

How to Verify the Result

After making the correction, check the data in several places.

The Balance by Financial Analysis Categories report shows cash movements by category and helps identify which category a transaction was assigned to.

Balance with Partners is useful when a transaction is related to an outstanding debt owed by a customer or to a supplier.

The Daily Cash Register Report helps verify cash movements for a specific cash register.

Torgsoft's financial and analytical reports can be used to assess business performance, but it is important to remember that different reports may calculate figures using different methods.