Machine learning for financial transaction classification across companies using character-level word embeddings of text fields

Research output: Contribution to journalJournal articleResearchpeer-review

An important initial step in accounting is mapping financial transfers to the corresponding accounts. We devised machine-learning-based systems that automate this process. They use word embeddings with character-level features to process transaction texts. When considering 473 companies independently, our approach achieved an average top-1 accuracy of 80.50%, outperforming baselines that exclude the transaction texts or rely on a lexical bag-of-words text representation. We extended the approach to generalizes across companies and even across different corporate sectors. After standardization of the account structures and careful feature engineering, a single classifier trained on 44 companies from 28 sectors achieved a test accuracy of more than 80%. When trained on 43 companies and tested on the remaining one, the system achieved an average performance of 64.62%. This rate increased to nearly 70% when considering only the largest sector.

Original languageEnglish
JournalIntelligent Systems in Accounting, Finance and Management
Volume28
Issue number3
Pages (from-to)159-172
ISSN1550-1949
DOIs
Publication statusPublished - 2021

Bibliographical note

Publisher Copyright:
© 2021 John Wiley & Sons, Ltd.

    Research areas

  • accounting, finance, financial transactions, multiclass classification, random forest, word embedding

ID: 280029661