Checking transaction categories for preliminary figures is important because it helps ensure accuracy and alignment with your business’s financial goals. You get a clear overview of the month’s performance which provides a good picture for internal and external stakeholders.

Here are a few reasons why this step is crucial:

1. Correct allocation of funds: transaction categories help properly classify expenses and income, ensuring that funds are allocated correctly across different areas of the business. Without reviewing these categories, you risk misclassifying transactions, which can distort financial analysis.
2. Accurate financial reporting: preliminary figures are often used for early financial reports or forecasts. Reviewing transaction categories ensures that these figures are based on the right classifications, leading to more accurate and reliable financial statements. It also allows for better tracking of cash flows and performance metrics.
3. Identifying potential errors: transaction categories act as a safeguard to identify errors in data entry. By checking them early, you can spot discrepancies or mistakes before they affect the final figures, such as double-counting expenses or missing revenue sources.