FreeAgent Bookkeeping Automation: Explain Every Bank Line with AI
FreeAgent already guesses some of your bank lines. CodeIQ checks every guess, codes the rest, and explains each line in FreeAgent with the right category and VAT, in one pass.
FreeAgent is a favourite with UK freelancers, contractors and small limited companies, and it comes free with several UK business bank accounts. Its bank feed brings every transaction in, and it even suggests explanations for the ones it recognises. What it cannot do is decide for you: every line still waits in For approval or Unexplained until someone opens it, checks it and clicks save.
CodeIQ is the AI bookkeeper we built at ReconcileIQ to do that part. It connects to FreeAgent, learns how each business has explained its transactions before, codes the month's bank lines with an eight-phase pipeline, and writes the explanations back onto FreeAgent's own bank feed lines. For an accountant or bookkeeper with a stack of FreeAgent clients, a month that took an afternoon of clicking becomes a review.
The Problem: Every Line Still Needs Explaining
Two Queues, One Person
FreeAgent splits the bank feed into two piles. Lines it recognises get a suggested explanation and sit in For approval. Lines it does not recognise sit in Unexplained. Both need a person. The first pile is a long list of guesses to check one by one; the second is the hard part, the new suppliers, the odd payments, the money that should have gone against an invoice.
FreeAgent's guesses are a real help, but they are guesses. They follow what similar lines were explained as before, so a supplier that changed category, a payment that settles an invoice, or a transfer between your own accounts can come through wrong, and approving a page of them quickly is how errors get into the VAT return. Meanwhile the unexplained pile gets no help at all.
CodeIQ takes both piles in one pass. It codes every line independently, compares its answer with FreeAgent's guess, and only then writes anything back.
How It Works: Six Steps from Bank Feed to Explained
Connect FreeAgent
CodeIQ connects through FreeAgent's own approval screen. You sign in to FreeAgent, approve ReconcileIQ once, and the connection stays in place for future sessions. No API keys or shared passwords.
Learn from Your Explained Transactions
When a session starts, CodeIQ reads your FreeAgent categories, your bank accounts and your open invoices and bills. Then it reads the bank transactions you have already explained and learns how each payee was treated: which category, which VAT treatment. Guesses still waiting for approval are deliberately left out, so only decisions a person confirmed teach it anything.
History: “HISCOX INSURANCE DD” → Insurance → Exempt
Seen: 16 explained transactions
Learned from your own FreeAgent explanations, applied to new lines automatically
Pull the Lines Waiting in FreeAgent
Each bank account has a Pull lines from FreeAgent button. It brings in the unexplained lines and the ones FreeAgent has guessed, each with its link back to the exact FreeAgent bank line. Accounts with nothing waiting are marked as having no activity. Statement uploads (CSV, Excel or PDF) still work for accounts without a bank feed.
Code with the Eight-Phase Pipeline
Every line runs through transfer detection, invoice matching, your own history, crowd-sourced merchant patterns, merchant category codes, semantic AI, your past corrections and VAT classification. Coding uses your actual FreeAgent categories and FreeAgent's VAT treatments, so there is nothing to remap afterwards.
Line: “SHELL 7743 LEEDS” −£61.20
Coded to: Motor Expenses, standard rate 20%
FreeAgent's guess: the same, so posting approves it
Review, with FreeAgent's Guess Beside Each Line
The review screen shows CodeIQ's category, VAT and confidence for every line, and a marker wherever FreeAgent had a guess: FreeAgent agrees, FreeAgent said: Rent, or FreeAgent bill payment kept. Low-confidence lines are held back for you. Re-code a line and the marker updates to show what posting will now do.
Post: Explained in Place, Nothing Duplicated
Posting writes onto FreeAgent's own bank lines. A guess CodeIQ agrees with is approved. A guess it disagrees with is corrected. A line FreeAgent left unexplained gets its explanation. Invoice receipts, bill payments and transfers are posted as exactly that, so invoices show as paid and transfers appear on both accounts.
Posted: 40 lines → FreeAgent
Guesses approved: 36 New explanations: 3 Transfer sides: 1
From our test company: nothing left unexplained or waiting for approval, and no duplicate lines
What CodeIQ Does Inside FreeAgent
CodeIQ posts to Xero, QuickBooks, Sage, Pandle and FreeAgent. With FreeAgent it works directly on the bank feed line and checks FreeAgent's own suggestions, so the month is finished in FreeAgent itself rather than left for matching.
Checks FreeAgent's Guesses
- Approves the guesses it agrees with
- Corrects the category or VAT when it disagrees
- Keeps FreeAgent's invoice and transfer matches
- Explains the lines FreeAgent could not place
FreeAgent VAT Treatments
- Standard rate (20%)
- Reduced rate (5%)
- Zero rated
- Exempt and outside the scope of VAT
Invoices and Bills
- Open invoices and bills read from FreeAgent
- Receipts and payments matched and settled
- Uploaded bills read, created and matched
- New suppliers created as contacts
Transfers, Splits and Currency
- Transfers between your FreeAgent accounts
- Transfers into euro and other currency accounts
- FreeAgent's own exchange rate shown per line
- One line split across several categories
Why Working on the Bank Line Matters
Most bookkeeping tools post a new transaction and leave you to match it to the bank feed afterwards, and if the feed already holds the payment, you can end up with it twice. CodeIQ explains the line FreeAgent already has. A statement line uploaded for an account that FreeAgent also feeds is checked first: if FreeAgent already holds something that looks like the same money, CodeIQ stops and tells you, rather than entering it again.
Currency Accounts and Marketplace Sellers
A foreign-currency account in FreeAgent books each line in sterling at FreeAgent's daily rate. CodeIQ shows that rate in its FX column, read from FreeAgent's own ledger, so the review matches what FreeAgent will record. A transfer from your sterling account to your euro account is posted with the amount that actually arrived, and FreeAgent records any exchange difference itself.
For eBay, Amazon and PayPal sellers, CodeIQ reads the marketplace's transaction report and posts sales, fees and refunds onto a marketplace account in FreeAgent, with UK sales at the standard rate and exports zero rated where the report shows it. The payout then appears as a transfer from that account into the bank. Marketplace-collected tax and held funds, which cancel each other out, are recognised and left off.
| Line in FreeAgent | What CodeIQ posts |
|---|---|
| Guess CodeIQ agrees with | Approves FreeAgent's explanation |
| Guess with the wrong category or VAT | Corrects it in place, then approves it |
| Unexplained line | Category and VAT, a split, a transfer, or an invoice or bill payment |
| Receipt for an open invoice | Invoice receipt, so the invoice shows as paid |
| Money moved between your accounts | A transfer, on both accounts |
Where IQ Books Fits
CodeIQ is how we bring automation to the ledgers your clients already use. IQ Books, by ReconcileIQ, is our own AI-native UK ledger built the same way from the start: bank lines arrive coded, receipts and bills file themselves from a photo or an email, and RiQ keeps the books while you review and sign off. The ledger is free. See IQ Books if you are choosing software for a new client.
Automate Your FreeAgent Bookkeeping
Connect FreeAgent, pull the lines waiting in your bank feed, and let CodeIQ code and explain them. A typical month takes about two minutes, then you review and post.
See CodeIQFrequently Asked Questions
How can I automate bookkeeping in FreeAgent?
Connect CodeIQ to FreeAgent once. CodeIQ reads your categories and learns from the bank transactions you have already explained, then pulls the bank lines still waiting in FreeAgent, codes them with its eight-phase pipeline, and explains each line in place with the right category and VAT after you review them. Nothing is entered twice, because CodeIQ works on FreeAgent's own bank feed lines rather than creating new ones.
Can AI approve the transactions FreeAgent has guessed?
Yes. FreeAgent guesses most recurring bank lines itself and parks them as For approval. CodeIQ pulls those guesses with the unexplained lines, codes every line independently, and shows whether it agrees with FreeAgent. On posting it approves the guesses it agrees with, corrects the ones it does not, and explains the lines FreeAgent left alone. FreeAgent's own invoice, bill and transfer matches are kept unless you re-code the line.
Does CodeIQ handle FreeAgent VAT, invoices and transfers?
Yes. CodeIQ uses FreeAgent's VAT treatments (standard, reduced, zero rated, exempt and outside the scope of VAT), pays open invoices and bills from the matching bank line, posts transfers between your FreeAgent bank accounts including currency accounts, and supports split transactions across several categories. Bills and invoices uploaded as PDFs or photos are read, created in FreeAgent and matched to their payment.
Is there an AI bookkeeper that works with FreeAgent?
CodeIQ by ReconcileIQ is an AI bookkeeper that works directly with FreeAgent. It learns each business's own coding history, codes new bank lines in about two minutes for a typical month, and explains them in FreeAgent with the correct category and VAT. It also reviews FreeAgent's own suggested explanations, so a month's bank feed is checked and finished in one pass.