Essential tips: 9 methods for reducing that pile of receipts

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Essential tips: 9 methods for reducing that pile of receipts

From scanning them yourself, to saving them with Evernote and sending them to services like Shoeboxed, here are some major methods of reducing that pile of receipts.

Storing paper receipts is a pain. You need to retain them for tax purposes and to support warranty claims, but the fact that they come in different shapes and sizes makes filing them a nuisance.

When it comes to those small over-the-counter transactions like buying a client a cup of coffee or replenishing the printer paper, the receipt is usually on thermal paper that tends to fade quickly in certain conditions.

Another problem is getting the purchases into your books. That’s no big deal for bank or credit card transactions as you won’t be able to reconcile the statements with missing transactions. But most of us have probably discovered the docket from a cash purchase hiding in a trouser pocket or in the bottom of a handbag weeks or months afterwards.

If you’ve already closed off the books for the relevant period it’s probably not worth the trouble to amend your records with a small number of low-value transactions, but that means your results will show a slightly higher profit than the actual position and you may have failed to reclaim all the GST that you were entitled.

You can address both these problems by storing and processing your receipts on a computer.

Storing receipts digitally - the basic process

You need to keep either the receipt itself or an image of it, so the process starts by scanning or photographing the document. The advantage of using phone camera is that you can be do it on the spot.

In other cases the original receipt might be sent to you in digital form, such as an HTML formatted email or a PDF attachment.

Next, the relevant information has to be extracted and entered into your books. You might have to do that manually or it could be done automatically (using Optical Character Recognition - OCR), like softwre that scans business cards. We'd argue accuracy is even more important when it comes to receipts, so we think having someone verify the information after it's scanned is important.

Sometimes this involves a third party (for example, some services have human workers who look at the image of the receipt and key-in the data). In this case, you may want to ask whether the job is being done at the lowest cost or by people that actually understand the nature of the documents. There are also local practices to take into account, such as the way cash register dockets show whether particular items were taxable.

Finally, the transactions are transferred to your accounting software - this involves varying degrees of automation. Where two cloud services are involved you may find it occurs with the click of a button once the setup process has been completed. Otherwise it may be necessary to export a file and then import it into your accounting software.

Some receipt applications or services incorporate approval and reimbursement processes. That can be a convenience, but you may prefer to handle those tasks within your accounting software.

What about throwing out my receipts?

We are not convinced it is wise to throw away receipts once they have been captured unless you have an adequate backup. The "traditional" shoebox of receipts can serve as that backup, or you could take steps to keep backup copies of the images.

Without questioning the financial stability of any of company offering to store your data in the cloud, we doubt the ATO would be impressed if in the course of an audit you said "sorry, I can't show you our receipts because the company that was storing them has gone out of business." Saasu made some interesting observations on the topic in this blog post.

We asked Shoeboxed about this and they pointed out that "Most cloud products (including ours) actually allow you to download and locally store any of your digital files. What does help is that people can download/store/export their documents to ease any of their worries."

We also asked Shoeboxed if it is ok to throw out receipts after scanning them and they helpfully pointed us to this page, which explains that the ATO accepts scanned receipts for BAS, annual returns and other purposes.

They pointed out that the quality of the image is important - if they can't read it, neither can the ATO. In case you're interested, here is an official taxation ruling about keeping electronic records.

As to whether it's ok to throw out paper receipts after they are scanned, Shoeboxed told us: "The answer is a qualified yes. Where the documents are sent to us for scanning, we can be certain that they meet the ATO requirements. If they are scanned by the business owner (eg via an office scanner or a mobile device), they should meet the ATO requirements, but obviously we cannot guarantee that, since they have been out of our control."

So what are some of your options when it comes to computerising your receipts? The following is not a list of every single app and method, but it's a summary of some:

1. Use your accounting software

 

One feature we like in certain - particularly cloud-based - accounting systems is that you can attach arbitrary files to individual records. An obvious use is to attach any supporting documentation such orders, invoices and receipts to transactions. This makes it very easy to locate the document should that become necessary. If you’re using Reckon Accounts, for example, SourceLink adds this functionality.

That doesn’t address the issues of actually capturing the images, converting the data into machine-readable form and loading it into your books, but in some cases there are add-on products or services to help.

You can find thid party apps that do this (see below), which you can sometimes get from your accounting software provider. One example is the Xero Touch mobile app that among other things lets you enter expenses along with a photo of your receipt. We understand Reckon One will include mobile receipt capture and storage.

2. Scan and file your receipts manually

A special-purpose application isn’t essential for storing receipts electronically. Most scanners and all-in-one/multifunction printers include software that lets you scan a document and store the resulting file in a more or less organised way.

The most basic simply drop the scanned images into a folder. While this sounds primitive, if your scanning software performs OCR when producing PDF files then the operating system’s built-in search facility (for example, Spotlight on a Mac) can be used to find particular files. A small improvement on this method is systems that automatically deposit scans into a series of subfolders, one for each day.

Sometimes more sophisticated software such as PaperPort is included, but it can also be purchased separately - typically in a more feature-rich version than that bundled with hardware. Features may include OCR (in case that’s not provided by the basic scanning software) to make PDF files searchable or to transfer scanned text to other applications. It might also have be able to combine multiple scanned pages into one document (again, this may be included with basic scanning software). It might work with cloud services such as Evernote and SkyDrive and it might have a more convenient way to organise and search your files.

The main problem with this approach is that you don’t get any integration with your accounting software, whether that’s to automatically create transactions from receipts or to display the receipt corresponding to a transaction.

3. DocketBank

DocketBank is more of an expense management system than just a way of getting expenses into your accounting system and keeping images of individual dockets.

We like that the fact that the DocketBank team realise that recording dockets is useful at a personal level, not just for business purposes. So the system lets you link a business account with multiple personal accounts so that employees only need to use one app for both purposes, selecting the appropriate financial account (for example "Work Expenses" or "Groceries") for each transaction. A $19.99 per year pro account can be linked with up to 10 free or pro accounts.

You can export data from DocketBank in the form of an XLS (Excel) or CSV (comma separated value) file that can be loaded into MYOB and other packages, although some massaging may be needed to get it into exactly the right format. Your accounts staff can then reimburse via the payroll or other customary method. This approach is arguably less convenient than more integrated approaches such as the way Shoeboxed can send transactions directly to Xero. DocketBank is working on an improved expense report for import into accounting software and this will include references to the receipt image files.

The company is also developing a system that will allow retailers to generate electronic receipts that feed straight into DocketBank accounts.

4. Evernote

Evernote is a general-purpose tool for saving your electronic ‘stuff’. If you already use Evernote, it might be tempting to use it to store your receipts, especially as the premium and business accounts include OCR, which lets you search by the contents.

Some scanners and multifunction printers include the capability to scan directly into Evernote without going through a computer. This is particularly convenient if you scan a lot of paper documents. If your device doesn’t have this capability, it’s usually possible to direct scans to a particular folder or application on the computer in order to get the images into Evernote.

There are add-on products that provide a degree of integration between Evernote and accounting systems, but few of those we found are relevant to the specific task of handling receipts. For example, Zapier can create a Xero invoice from an Evernote note, and the company is considering Saasu integration. There is also an app called Expensify which automatically copies new images added to an Expensify notebook to Evernote, which would be convenient if you prefer keeping all your stuff in one place.

The cost of Evernote is based on the amount of data you may upload per month. For free accounts it is 60MB, for premium accounts ($US5.50 per month) 1GB, and business accounts ($US11 per user per month) get a pooled quota of 2GB quota per user.

5. ExpenseMagic

ExpenseMagic is another expense management system. Its distinctive feature is that expense details are transcribed by bookkeepers with a “100% accuracy guarantee”. That’s assuming you are a paying customer (starting at $14.99 for one user), in which case you can submit receipt images via the company’s iPhone app or via the web, email or by using Dropbox.

The high end of the service is a corporate account for at least five users ($7.49 per user per month). Benefits include the ability to manage individual employee accounts and to create custom expense types.

If you don’t want to pay you can still use the ExpenseMagic app, but you’ll have to enter the details manually. You can still get expense reports from ExpenseMagic.

We particularly like the way ExpenseMagic integrates with your calendar, even if this feature is only on the iPhone app -  it's an easy way of recording the nature of the expense. The less effort involved in recording a transaction, the more likely you'll do it promptly and thoroughly.

Once a receipt has been captured and transcribed by ExpenseMagic it can be automatically transferred to Xero so the expense appears in the accounts. The reimbursement must be processed manually.

6. Expensify

 

Expensify’s aim is “expense reports that don’t suck!” As such, it aims to be a complete expense system that captures scanned, photographed or natively-digital (emailed from airlines, for example) receipts, and managing the approval process through to reimbursement.

In addition to photographing receipts, the optional Expensify mobile app can collect hours spent (handy if you bill clients by time) and distance travelled by using odometer readings, the device’s GPS, or manually entered numbers. Recording kilometres driven with the same app that captures receipts makes a lot of sense.

The US-based company recently added GST support, and a spokesperson said that has boosted adoption rates among Australian businesses. Credit card transactions can be imported from most Australian banks.

While Expensify offers specific integrations for QuickBooks Online and Xero, it can export CSV files that can be read by other accounting packages and import expense categories from them. It sensibly provides URLs of receipt images to the accounting software for convenient retrieval (where supported). Reimbursement is handled via an export to the payroll system. Closer integrations with other Australian accounting systems are under investigation.

Expensify is charged per user, but you only pay for the number of people that actually used the system in a particular month. For small businesses, the first two ‘submitters’ are free, and the rest cost $US11 each.

7. Invitbox

Invitbox is intended to save you the trouble of manually entering your suppliers’ invoices into an accounting system. If you are using it for that purpose you can also take advantage of it for expense receipt processing and storage.

It normally works by receiving invoices in PDF format via email from your suppliers and extracting individual items, but the company also provides a service that manually enters data from scanned or photographed receipts. Either way, the Invitbox system includes approval workflow and can automatically categorise the transaction.

Invitbox works with Xero (including the ability to view the invoice relating to a transaction), Saasu, MYOB (currently desktop only, with Live support coming), Reckon (with Reckon One support coming), and more.

The somewhat unusual thing about Invitbox is that instead of being a subscription service (for example, costing $X per month per business or per user), you buy a certain number of credits and then one credit is deducted for every bill processed and another for every receipt manually entered. That’s not unreasonable given the wide variations in the number of invoices different businesses receive each month. Monthly plans start at $19 for 25 credits, or you can buy blocks of credits with six-month validity from $119 for 150 credits.

8. Receipt Bank

Receipt Bank extracts data from receipts you submit by email, mobile app (iOS and Android phones and tablets), Dropbox, upload from your computer, or post. If you take the last option, be aware that the originals will be securely destroyed after scanning.

We contacted Receipt Bank which confirmed for us that the service "extracts data from invoices and receipts using technology with a human verification stage".

Users are notified by email when a batch of items has been processed, which saves repeatedly checking your account. Conveniently, each supplier can be given a default category - for example, Jetstar and Virgin Australia receipts almost certainly relate to travel.

Data from Receipt Bank can be downloaded for further manipulation or analysis in Excel, or sent to Xero. The integration means Xero categories and projects are available to Receipt Bank. A company spokesperson told us although it does integrate with other systems, it doesn't currently integrate with any other Australian systems.

Prices start at $14.99 per month for a single user or $30 for multi-user plans (up to 75 items per month in both cases). Recept Bank also offers a free service for those who don’t mind looking after the data entry and just want to be able to submit, store and export receipts.

Receipt Bank has special arrangements for accountants and bookkeepers that want to use the service on behalf of their clients.

9. Shoeboxed

One of the things that make Shoeboxed interesting is that it adds a human touch to automation, in that a real person in Sydney verifies the most important pieces of data from each receipt (date, vendor, amount, GST, and payment type, according to the company) after it has been OCRed.

The other is that Shoeboxed will do the scanning for you - the company provides customers on more-expensive plans with reply-paid envelopes so you can send in your receipts and other documents. You also have the option of having your papers returned after they are scanned (unlike Receipt Bank) or to have them securely destroyed. If you prefer, you can submit scans or photos of your documents using a phone app or the Shoeboxed web site.

Prices are based on the number of documents you input per month (50 for $19.95, 150 for $39.95, 500 for $99.95), although the more expensive plans include additional features. The free "DIY" plan is limited to five documents scanned by the user each month, which we'd argue might be a bit limited for many businesses.

Shoeboxed integrates with MYOB, Xero, Evernote and other services via exported files. Special plans are offered to accountants and bookkeepers so they can use Shoeboxed on behalf of their clients.

 

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