Last editedMay 20222 min read
Whether issued to customers or received from suppliers, receipts can quickly add up to a mess of paperwork for any small business. It’s important to take control of receipt management to track both spending and revenue. Fortunately, there’s a wealth of receipt management apps to help streamline this process.
What is receipt management?
An essential component of general accounting, receipt management involves the secure tracking, storage and handling of business receipts.
There are two facets of receipt management to be aware of:
Expense receipts: Issued by suppliers when a business purchases goods or services. These include things like utility bills as well as physical goods.
Customer receipts: Issued by businesses when a customer purchases goods or services.
Any good online receipt management system will have clear policies to store both types of receipts, keeping them separated. While tracking the first type of expense receipt helps with calculations of profit and loss, managing customer receipts helps a business track its daily income.
Why is business credit card receipt management important?
Even small businesses often handle hundreds of customer receipts each day or more, depending on the type of goods or services provided. A good management system is essential for keeping an accurate record of sales and income.
In addition to basic record-keeping, businesses accepting card payments must carefully retain receipts for another reason – fraud protection. This starts with chargebacks. Customers paying by card have the right to request chargebacks through their issuing bank or credit card company. When a chargeback is filed, it’s the merchant’s responsibility to prove the legitimacy of the purchase with receipts.
Business credit card receipt management is also vital for tax purposes in case of an IRS audit. As with a chargeback investigation, the IRS auditors will request proof of transactions including receipts if your business is chosen for further investigation. By keeping receipts well organized, you’ll be able to make the process run more smoothly and prove that business transactions are valid. For this reason, the IRS recommends holding onto all receipts for a minimum of three years.
How to manage credit card receipts
It’s important to develop a system for managing your receipts, whether you store them manually or electronically. Most businesses choose to store sales receipts in chronological order, making them easier to retrieve for accounting purposes. For expense receipts, a category-based system might be more efficient. Filing and storing expenses by category makes it easier to sort out the tax-deductible expenses from those that aren’t deductible.
Storing paper copies of sales receipts might work for businesses that don’t process large volumes of sales. However, if you go through hundreds or thousands of sales each week, you’ll need to learn how to manage credit card receipts more efficiently. Most accounting software allows you to scan receipts into a digital format and store them automatically in the cloud. This ensures nothing goes missing, and also facilitates easy retrieval as part of your tax checklist.
How can receipt management software help?
Receipt management software offers a great way to keep your paperwork organized, both on and offline. To get started with receipt scanning, you can download an app that takes your photos of receipts and stores digital copies of them using optical character recognition (OCR) technology. Benefits of digitizing receipts include:
They’re backed up in the cloud for easy retrieval.
You’ll have them organized by date, category, and keyword.
You can integrate the scanning app with accounting software.
Choose from dedicated receipt management software like Expensify and Receipt Bank as well as general accounting apps like Xero, all of which offer receipt scanning capabilities. GoCardless also integrates with over 300 partners, merging easy payment collection with receipt management and accounting. By going paperless with cloud accounting and payment solutions like GoCardless, you can drastically reduce time and money spent on financial admin.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.