Account Normalization

Learn how the Railz chart of accounts normalization works

The Chart of Accounts defines the financial structure of a business by providing a list of all accounts used by the business to classify a transaction in the general ledger.

When a business connects its accounting service provider, Railz normalizes every account and assigns one of our account classifications. This allows Railz to produce analytics and insights about your business customers irrespective of the accounting service provider they use.


No Modifications in Data Source

The assigned classifications are in the Railz platform only. Railz does not override or modify any accounts in the accounting data source.

Why Normalize Accounts?

  1. Allows you to use our normalized account classifications to populate your own internal credit models, underwriting decision engine or spreading tools.
  2. Easily identify and compare accounts across your portfolio of connected businesses.
  3. Railz uses the normalized account classifications to generate analytics and insights, e.g. financial ratios, financial benchmarks and forecasts.

How are Classifications Assigned to Accounts?

Railz normalizes all charts of accounts using 4 sub-classifications:

  • Section - the highest level classification of an account, e.g. Asset, Liability, Income, etc.
  • Subsection - a more granular classification of an account based on the Section, e.g. Current Assets, Current Liabilities, etc.
  • Group - a more granular classification of an account based on Subsection, e.g. Cash, Inventory, Depreciation, etc.
  • Subgroup - the most granular classification of an account representing an individual account and is based on Group, e.g. Cash on Hand, Accumulated Amortization, etc.

List of Account Classifications

A list of all the Railz account classifications used in our data models and API endpoints can be found under our GitHub gist (sample snippet below).

    "Current Assets",
    "Non Current Assets",
    "Current Liabilities",
    "Non Current Liabilities",
    "Cost Of Goods Sold",
    "Operating Expenses",
    "Other Expenses",
    "Other Income"