How To Keep the Records Straight with Business Receipt Trackers
Keeping track of every expense made within your company may seem like a daunting task, but it is the foundation for a successful business. To operate a business smoothly, an organization needs effective financial planning which can only happen through meticulous receipt tracking.
The trouble is, many small businesses may struggle with finding the resources to track their finances efficiently, whether that be through hiring an external accountant, hiring more employees for their Finance team, or purchasing accounting software.
As a result of limited budgets or a lack of resources, small businesses may keep these processes predominantly manual – with filing cabinets filled with paper receipts sometimes dating back decades and multiple Excel spreadsheets.
Unfortunately, this is a recipe for errors and fraud in bookkeeping and can chip away at employee productivity. The hassle of manually filling up expense reports and having to upload receipts regularly can mean hours spent in administrative work.
What is financial record-keeping for business?
Financial record keeping is a process to track expenses in a business in a systematic way.
The type of system used may vary from business to business, with some going the route of hiring an internal Finance team to oversee manual accounting and bookkeeping processes. Meanwhile, others hire external accountants and some purchase bookkeeping technologies such as a business receipt tracker.
What’s the difference between receipts and invoices?
While invoicing involves a request for payment for billable products or services, a receipt is a confirmation, acknowledgement and proof of payment issued once payment is made to a business or vendor and customers have received the goods paid for.
Receipts submitted by employees for their expenses, such as business travel expenses, are also important to track for reimbursement purposes.
These receipts can be stored in either or both physical and digital forms.
Why is it important to keep and track business receipts?
There are a few reasons why businesses need receipt and expense tracking.
1. Resource planning and budgeting
Receipt tracking is crucial to help a business plan spending while staying within a budget. Setting a budget itself is impossible without staying on top of expenses made in the company and accurately understanding what the balance sheet says.
Without an overview or an efficient tracker for payments to vendors and suppliers, management is left in the dark about the company’s finances – blocking their ability to make decisions about future spending.
2. Preparing for tax season
Another important reason to keep track of receipts of your company’s business expenses is to reap the benefits of eligible tax deductions from the Inland Revenue Authority of Singapore (IRAS) where possible. Being able to efficiently track expenses but also retrieve receipts seamlessly allows your business to take full advantage of tax benefits when tax season comes around.
3. Warranties, replacements and repairs
Let’s say a set of computers you purchase for your employees are faulty and need replacing or repair. You check the warranties which haven’t expired and plan to use them. To your dismay, you discover that you no longer have the paper receipts for the computers – meaning you now have to fork up the cost of the equipment.
This is an all-too-common situation that happens due to a lack of an effective receipt tracking system, leading to misplaced receipts and losing out on potential profits due to unnecessary costs.
Measuring the success of your business comes down to calculating its profitability – which can only be achieved by tracking receipts efficiently.
By capturing key receipt information and storing it in ways that make these receipts easily retrievable, your business can then access them easily when needed and make thoughtful spending decisions based on accurate data.
Understanding the company’s financial health gives management the ability to strategize effectively for the future to set it on the path to becoming more profitable.
How do I keep track of business receipts?
There are generally two ways to track business expense receipts – manually or through automated bookkeeping technology.
Manual receipt tracking
Manually tracking receipts is the traditional route many small business owners use as their bookkeeping system. This method is mainly paper-based and relies on employees to authenticate and store receipts manually.
The trouble with this method is that it relies heavily on human resources and can be time-consuming for employees who have to manually fill up expense reports, affecting their productivity. The other issue with manual receipt tracking is that it leaves plenty of room for human error with manual data entry.
Fraud is also less easily detected when receipts are processed manually. For instance, if the employee in charge of tracking and authenticating receipts is the one committing fraud and submitting fabricated receipts to claim, this may not be discovered until it’s too late.
Automated receipt scanner apps
Companies can now automate receipt tracking using accounting software technology. This saves time, resources and costs needed to manually authenticate, store and retrieve paper receipts.
Automated receipt tracking software typically involves capturing receipts into an integrated system using Optical Character Recognition (OCR) technology.
Employees scan receipts for their expenses and the software then uses image processing technology to sort them according to receipt ID numbers, amounts, recipients and other relevant information eliminating the hassle of manual data entry.
This gives the finance department a comprehensive view of expenses without the need to match each individual receipt with an expense made. With this visibility, the risk of fraud and errors are minimized.
How to choose a business receipt tracker
Choosing the best receipt tracker software for your business is important to ensure the system meets all your company’s expense management needs.
The following are a few criteria to consider when selecting the best receipt tracking software for your business.
Ease of use
First and foremost, the best expense tracking software for your business is one that employees feel comfortable using regularly. It’s no use purchasing software that intimidates employees with a complicated interface or one that wears them down with technicalities.
For example, digitally scanning paper receipts and dedicated bank accounts linked to business credit cards both eliminate the need for manual data entries and create a more seamless expense reporting experience for employees.
Choose an intuitive expense tracker software with a user-friendly interface that’s easy to use to maximize employee buy-in.
Ease of integration
It’s also important to choose the technology which integrates easily with your existing accounting software. A receipt tracker which communicates and works with your existing accounting tools such as Xero will make for a more seamless adoption process.
Choose an expense tracking system that connects your company bank account to your accounting software to automatically import transactions.
Integrating all scanned receipts into a single system that provides a big picture overview of all the company’s expenses is crucial. This allows the finance department and management to make decisions easily when they have a single location to access information.
When tax time comes around, receipt information is readily accessible for the finance department to make the most of eligible tax deductions.
With thousands of receipts to track, it’s also best to choose software that can house a large amount of data, which stores receipt information using intuitive, systematic categorization.
Instead of filing through multiple cabinets and folders, every employee needs to understand where to locate receipts and receipt information when needed. This is done easily with the right expense management platform using an integrated, centralized system.
Receipt tracking is important for any business. Having an organized record-keeping system. Meanwhile, automated expense tracking apps can help keep your finances in shape and set your company on the road to success.
Here are a few final tips for effective expense tracking:
- Digitize all paper receipts with a receipt scanner
- Use software to categorize and keep your expenses all in one place
- Have a dedicated business bank account and card
- Connect your bank account to your accounting software to automatically import transactions
- Review and categorize your business expenses regularly
- Choose user-friendly and intuitive expense tracker software or receipt tracking mobile apps
Looking to stay on top of your business expenses and automate receipt tracking?
Spenmo automates expense tracking and stores receipts in a centralized system, allowing your business to simplify expense reports and reimbursements.
Let employees scan receipts from anywhere in real-time with our receipt scanning app available on both iOS and Android mobile devices.
Talk to us today about adopting an expense management platform!
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