QuickBooks Class Assignment Standard
Internal Guide for Sales, Customer Service, Invoicing, and Accounting
Index
- Purpose
- The Basic Rule
- Why We Use Classes
- Default Class Assignment
- VEONICS Class
- SYSTEMS Class
- PRODUCTION Class
- FACTORY Class
- Shipping Is Not a Class
- Orders Containing More Than One Class
- Responsibility for Correct Class Assignment
- Approved Unassigned Transactions
- Temporary Legacy Proposal and Estimate Exception
- Current Scope of Class Accounting
- Expense Class Allocation – Future Phase
- Class Assignment and Revenue Recognition Are Separate
- Quick Class Decision Guide
- Class Governance Rules
- Management Reporting Objective
Purpose
eXpress badging® uses QuickBooks Classes to identify which of the Company's four primary operating channels is responsible for Income and Cost of Goods (COG).
The four Classes are:
- VEONICS
- SYSTEMS
- PRODUCTION
- FACTORY
Classes allow leadership to evaluate financial performance by business channel without creating unnecessary General Ledger accounts.
The initial objective is to produce reliable:
- Income by Class
- COG by Class
- Gross Profit by Class
There is no SHIPPING, OTHER, MISC, or UNASSIGNED operating Class.
The Basic Rule
When creating or reviewing a customer transaction, ask:
Which eXpress badging operating channel is responsible for delivering this product or service?
That is the appropriate Class.
Do not select a Class based on:
- Who sold the order
- Which employee manages the customer
- Which manufacturer supplied the product
- Which customer purchased it
- Which General Ledger account happens to be selected
The Class represents the operating business channel.
In most cases, however, the user will not need to make this determination manually because the appropriate Class will already be assigned to the Item Code.
Why We Use Classes
The redesigned accounting structure separates different reporting responsibilities between the Chart of Accounts, Item Codes, Classes, and Reports.
| Accounting Tool | Answers the Question |
|---|---|
| Chart of Accounts | Where is the financial activity recorded? |
| Item Code | What product or service was sold? |
| Class | Which operating business channel owns the activity? |
| Reports | What additional detail does management need? |
This allows the Chart of Accounts to remain simple while Item and Class reporting provide the operational detail management needs.
Example
We do not need separate General Ledger accounts or Classes for every:
- Printer manufacturer
- Card technology
- Ribbon
- Badge material
- Veonics SaaS product
- Production finishing service
- Factory product variation
The appropriate Item Code provides this level of detail.
The Class identifies whether the financial activity belongs to:
VEONICS | SYSTEMS | PRODUCTION | FACTORY
Default Class Assignment
Most active Item Codes are configured with a default Class.
Therefore, Sales and CSR should normally not need to manually select or determine a Class for every Item.
The standard workflow is:
- Select the correct Item Code.
- Allow the default Class to populate.
- Confirm that the populated Class appears reasonable.
- Manually change or assign the Class only when required by an exception.
The objective is to make the correct accounting treatment the easiest accounting treatment.
Default Class Rule
Selecting the correct Item Code should normally determine the correct Class. The user's responsibility is primarily to verify the result, not recreate the accounting assignment.
If an Item repeatedly populates the wrong Class, do not continue fixing every Proposal or Invoice manually.
Correct the Item configuration.
If the problem becomes repetitive or indicates a larger process issue, raise it through the Company's EOS Issues process.
1. VEONICS Class
Use the VEONICS Class for products and services delivered through the Veonics® software ecosystem.
Examples include:
- Veonics® Portal subscriptions
- MyBADGING® subscriptions
- VerifyMyBADGE™ subscriptions
- Future Veonics® SaaS products
- Veonics development services
- Veonics setup and implementation services
- Other Veonics-specific revenue and direct COG
Product-level SaaS reporting should be obtained through Item Reports, not by creating a separate Class or General Ledger account for every Veonics product.
Veonics Rule
If the customer is purchasing access to, development of, setup of, or services directly associated with the Veonics® software ecosystem, use VEONICS.
2. SYSTEMS Class
Use the SYSTEMS Class for commercially resold systems products, supplies, software, and technical support.
Examples include:
- Badge printers
- Printer hardware and peripherals
- Non-Veonics software
- Generic PVC and technology cards
- RFID and proximity cards
- Printer ribbons
- Laminates and consumable supplies
- Technical support
- Manufacturer support
- EBS technical support
- Generic eXpressPROX™ cards purchased from 3 MIL and blind drop-shipped to the customer
Systems product detail is obtained through Item reporting.
eXpressPROX™ Example
eXpressPROX™ is a product brand, not a Class.
A generic proximity card purchased from 3 MIL, branded as eXpressPROX™, and blind drop-shipped to the customer is:
-
Class: SYSTEMS
A proximity credential personalized within the eXpress badging Production department is:
-
Class: PRODUCTION
The fulfillment method determines the operating channel.
Systems Rule
If eXpress badging is primarily reselling hardware, cards, supplies, non-Veonics software, or technical support rather than manufacturing or personalizing the product, use SYSTEMS.
3. PRODUCTION Class
Use the PRODUCTION Class when eXpress badging® performs badge personalization, printing, encoding, finishing, or related fulfillment services through the Production department.
Production currently has two primary fulfillment models.
BAAS – Badging as a Service
BAAS represents recurring or prepaid badge fulfillment arrangements in which the customer purchases Production capacity or badge credits that may be consumed over time.
BAAS will utilize dedicated Item Codes for:
- BAAS Printing
- BAAS Add Services
- BAAS finishing services
- Other BAAS fulfillment activity
BAAS Item Codes must remain separate from BATCH Item Codes because:
- Management must be able to measure BAAS revenue and Gross Profit independently.
- BAAS may require Revenue Recognition treatment that does not apply to standard BATCH orders.
BATCH
BATCH represents traditional Production orders produced and fulfilled as a defined job or series of releases.
BATCH includes:
- Standard BATCH printing
- Quick Card orders
- BATCH Add Services
- Personalized proximity credentials
- Printing and finishing services that are not part of a BAAS arrangement
Some larger BATCH orders may involve deposits or multiple releases over a period of time.
This does not change their operating Class.
They remain:
-
Class: PRODUCTION
Any Revenue Recognition considerations arising from the billing or fulfillment arrangement are addressed separately under the Company's Revenue Recognition policy.
BAAS vs. BATCH
Both fulfillment models use:
-
Class: PRODUCTION
Their distinction is maintained through:
- Separate Item Codes
- Separate Production Income accounts where applicable
- Revenue Recognition configuration, where applicable
- Item and financial reporting
Production Rule
If eXpress badging is physically personalizing, printing, encoding, finishing, or fulfilling customer credentials through Production, use PRODUCTION.
4. FACTORY Class
Use the FACTORY Class for products sourced through the Company's Factory and custom-manufacturing channel.
Examples include:
- PRESSCARDS
- Custom PVC card manufacturing
- Teslin products
- Custom printed cards
- Badge holders and accessories assigned to the Factory channel
- Custom manufactured badge holders
- Other custom-manufactured products sourced through Factory suppliers
Generic versus customized Factory product detail should be obtained through Item reporting, rather than additional Classes or General Ledger accounts.
Factory Rule
If the product is being custom manufactured or sourced through the Factory product channel rather than produced internally or sold through Systems, use FACTORY.
Shipping Is Not a Class
There is no SHIPPING Class.
Shipping has dedicated Income and COG accounts within the Chart of Accounts, but Shipping activity is assigned to one of the four operating Classes.
Single-Class Orders
When an Estimate or Invoice contains activity from only one operating Class, Shipping uses that same Class.
| Customer Order | Shipping Class |
|---|---|
| Systems printer shipment | SYSTEMS |
| Systems supplies shipment | SYSTEMS |
| BAAS badge shipment | PRODUCTION |
| BATCH badge shipment | PRODUCTION |
| PRESSCARDS shipment | FACTORY |
| Veonics-related physical shipment, if applicable | VEONICS |
Mixed-Class Orders
Some Estimates and Invoices contain Items from more than one Class.
It is not necessary to split one Shipping charge across several Classes merely to achieve theoretical accounting precision.
For a mixed-Class order:
Assign Shipping to the Class responsible for the greatest portion of the actual or reasonably expected shipping cost.
The decision should be based on the shipment creating the freight burden, not simply which Class generated the greatest sales revenue.
Example:
An Invoice includes:
- $3,000 Systems printer
- $500 Production badge order
If the printer represents most of the shipping cost:
-
Shipping Class: SYSTEMS
If the Production cartons create most of the freight cost:
-
Shipping Class: PRODUCTION
Shipping Rule
Single-Class Order: Shipping follows the underlying Class.
Mixed-Class Order: Shipping follows the Class responsible for the greatest shipping cost.
This provides sufficiently accurate management reporting without creating unnecessary split-line accounting.
Orders Containing More Than One Class
Some customer Proposals or Estimates may legitimately contain products from multiple operating channels.
For example, a customer may purchase:
- A badge printer
- Printer supplies
- Badge holders
The transaction therefore contains both:
SYSTEMS and FACTORY activity.
The individual Items should retain their default Classes.
| Item | Class |
|---|---|
| Badge Printer | SYSTEMS |
| Printer Ribbon | SYSTEMS |
| Badge Holders | FACTORY |
| Shipping | Class generating the greatest shipping cost |
Do not force an entire mixed-channel order into one Class.
The goal is meaningful channel reporting without making order entry unnecessarily complicated.
Responsibility for Correct Class Assignment
Class accuracy is a shared control with three levels of responsibility.
Level 1 – Sales and Customer Service
Sales and CSR have primary responsibility for ensuring Class accuracy when creating the Proposal or Estimate.
Because most Item Codes have default Classes, this generally means:
- Select the correct Item Code.
- Confirm that the expected Class populated.
- Correct an obvious exception.
- Assign Shipping appropriately when required.
- Confirm mixed-channel orders contain reasonable Class assignments.
Class assignment should not normally require an accounting decision on every Item.
Level 2 – Invoicing Review
The person converting the Proposal or Estimate into an Invoice provides the second level of control.
During Invoice creation, review:
- Did the expected Classes populate?
- Do the Classes make sense based on the Items?
- Is Shipping assigned appropriately?
- Are mixed-channel Items properly classified?
- Are any financially meaningful Income or COG lines unexpectedly Unassigned?
- Are approved non-classified lines appropriately left Unassigned?
If an obvious error is found, correct it before completing the Invoice.
Repeated Errors
An occasional Class error should simply be corrected.
Repeated errors indicate a process problem.
If the same issue occurs frequently, add it to the Company's EOS Issues List so the underlying cause can be resolved.
Possible causes include:
- Incorrect Item configuration
- Unclear Item naming
- Employee training
- Outdated Proposal templates
- Incorrect workflow instructions
- Missing accounting standards
The objective is not to continually correct the same accounting mistake.
The objective is to solve the cause of the mistake.
Level 3 – Finance Monthly Control
Finance provides the final accounting control.
As part of the monthly financial close, Finance should run a:
Profit & Loss by Class
and review transactions appearing as:
- Unassigned
- Not Specified
- Or the equivalent QBO designation
Finance should distinguish between errors requiring correction and approved transactions that legitimately do not require a Class.
Approved Unassigned Transactions
Unassigned Is Not a Fifth Class
eXpress badging® maintains only four operating Classes:
VEONICS | SYSTEMS | PRODUCTION | FACTORY
A fifth Class such as:
- MISC
- OTHER
- ADMIN
- UNASSIGNED
should not be created merely to provide a Class value for transactions that do not belong to an operating channel.
Some transaction lines legitimately remain without a Class.
$0 / No-Charge Item Lines
Informational, descriptive, or no-charge Item Codes with no financial value do not require a Class.
Because these Items generate no Income or COG impact, assigning a Class provides no meaningful management-accounting benefit.
AvaTax / Sales Tax
The AvaTax or sales-tax line does not require an operating Class.
Sales tax collected from a customer represents an amount collected on behalf of a taxing authority rather than Income belonging to:
- VEONICS
- SYSTEMS
- PRODUCTION
- FACTORY
It should therefore remain outside the four-Class operating structure.
Other Non-Operating or System Lines
Other transaction lines may occasionally:
- Have no P&L impact
- Represent Balance Sheet activity
- Serve a system or clearing function
- Otherwise not economically belong to an operating channel
These lines may remain Unassigned when approved by Finance.
Important Control
Unassigned must never become a convenience bucket for operating Income or COG.
If a transaction represents financially meaningful Income or direct COG associated with one of the Company's four operating channels, it must receive the appropriate Class.
The distinction is:
Operating financial activity with an identifiable channel → Class required
Approved tax, system, Balance Sheet, or $0 activity → Class not required
Finance's objective is therefore not to make the Unassigned column literally equal zero.
The objective is:
Financially meaningful operating Income and COG should have virtually no unexplained Unassigned activity.
Temporary Legacy Proposal and Estimate Exception
During implementation, management should expect temporary Unassigned Class activity.
Many existing Proposals and Estimates were created before the Class Assignment Standard was implemented.
Those transactions may continue moving through the sales and fulfillment process and eventually convert into Invoices without a Class assignment.
This is an expected transition issue.
When encountered:
- Assign the appropriate Class.
- Complete the transaction.
- Do not unnecessarily rebuild the historical Proposal solely because it predates the new Class standard.
As older Proposals and Estimates move through the order pipeline, the volume of unexplained Unassigned transactions should decline substantially.
Management expects this issue to be significantly reduced over the next month or so as legacy Estimates work their way through the system.
Current Scope of Class Accounting
At this stage, Classes are being implemented primarily for:
- Income
- Cost of Goods
- Gross Profit reporting
The immediate objective is to produce reliable Gross Profit reporting for:
-
VEONICS
-
SYSTEMS
-
PRODUCTION
-
FACTORY
This will allow management to evaluate the financial contribution and Gross Profit performance of the Company's four operating channels.
Expense Class Allocation – Future Phase
Classes are not yet being systematically assigned across operating Expenses.
Many expenses benefit more than one operating channel, including:
- Administrative payroll
- Facilities
- Insurance
- Shared technology
- Leadership labor
- Utilities
- Other overhead
A formal Expense allocation methodology has not yet been developed or approved.
Until that methodology is established:
Employees should not independently allocate shared operating Expenses among Classes simply to complete a P&L by Class.
Management will develop a separate Expense Allocation Standard after:
- Income
- COG
- Item Codes
- Class assignments
have stabilized.
A future methodology may consider:
- Direct attribution
- Revenue contribution
- Labor usage
- Headcount
- Square footage
- Another management-approved allocation basis
Until adopted, the Company's primary Class reporting objective remains:
Gross Profit by operating channel.
Class Assignment and Revenue Recognition Are Separate
Class Assignment and Revenue Recognition are intentionally maintained as separate accounting standards.
They answer different questions.
Class Assignment
Answers:
Which operating business channel owns the transaction?
Revenue Recognition
Answers:
When has the Company earned the revenue?
Example – BAAS
A BAAS order may require Deferred Revenue / Revenue Recognition treatment.
Its Class remains:
PRODUCTION
Example – Veonics SaaS
An annual Veonics SaaS subscription may require 12-month Revenue Recognition.
Its Class remains:
VEONICS
Example – Systems Support
A Systems extended support agreement may require Revenue Recognition.
Its Class remains:
SYSTEMS
Revenue Recognition does not change the operating Class.
Revenue Recognition requirements will therefore be documented separately in the:
Revenue Recognition / Deferred Revenue Standard
This will be developed separately with CFO Hub.
Quick Class Decision Guide
| What Are We Selling or Delivering? | Class |
|---|---|
| Veonics SaaS or ecosystem services | VEONICS |
| Veonics development or setup | VEONICS |
| Hardware or printers | SYSTEMS |
| Generic cards or supplies | SYSTEMS |
| Generic drop-shipped eXpressPROX | SYSTEMS |
| Technical support | SYSTEMS |
| BAAS badge fulfillment | PRODUCTION |
| BATCH badge fulfillment | PRODUCTION |
| Personalized proximity credentials | PRODUCTION |
| Production Add Services | PRODUCTION |
| PRESSCARDS | FACTORY |
| Factory-manufactured cards | FACTORY |
| Holders/accessories assigned to Factory | FACTORY |
| Single-Class Shipping | Same Class as underlying order |
| Mixed-Class Shipping | Class generating greatest shipping cost |
| $0 / No-Charge Item | No Class required |
| AvaTax / Sales Tax | No Class required |
| Approved Balance Sheet/System line | No Class required |
Class Governance Rules
- There are only four operating Classes: VEONICS, SYSTEMS, PRODUCTION, and FACTORY.
- Active Item Codes should contain the appropriate default Class whenever practical.
- Selecting the correct Item Code should normally drive the correct Class assignment.
- Sales and CSR are responsible for confirming the initial Class assignment on Proposals and Estimates.
- Invoicing provides the secondary review and corrects obvious exceptions.
- Finance reviews Unassigned activity as part of the monthly close.
- Unassigned is not a fifth operating Class.
- Financially meaningful operating Income and COG must be assigned to one of the four Classes.
- $0/no-charge Items do not require a Class.
- AvaTax and sales-tax lines do not require an operating Class.
- Other non-operating or system-generated lines may remain Unassigned when approved by Finance.
- Shipping is not a Class.
- Single-Class Shipping follows the underlying operating Class.
- Mixed-Class Shipping is assigned to the Class generating the greatest shipping cost.
- Repeated Class errors become an EOS Issue rather than a permanent manual-cleanup process.
- Product detail belongs in Item reporting rather than additional Classes or General Ledger accounts.
- Revenue Recognition does not determine the operating Class.
- Shared Expense allocation will not be implemented until a formal Expense Allocation Standard is approved.
Management Reporting Objective
The Class Assignment Standard is designed to provide leadership with reliable financial reporting across the Company's four primary operating channels:
VEONICS | SYSTEMS | PRODUCTION | FACTORY
The Company's accounting architecture should allow management to move from the consolidated Profit & Loss statement into progressively greater detail:
Company P&L
↓
Income, COG, and Gross Profit by Class
↓
Operating Channel
↓
Item Reports for Product-Level Detail
This maintains the Company's broader accounting philosophy:
Keep the Chart of Accounts simple. Use Item Codes and Classes to obtain the detail required for management decisions.
The operating model can be summarized as:
COA = Where financial activity is recorded
Item = What was sold
Class = Which operating channel owns it
Revenue Recognition = When the revenue is earned
Reports = The detail management needs
As the Company's accounting model matures, Expense allocation and Revenue Recognition standards may expand the usefulness of Class reporting.
Those enhancements should be implemented deliberately and should not compromise the simplicity, accuracy, or consistency of the current structure.