What is a Smart Receipt?
A smart receipt is a digital version of a paper receipt, aka an e-receipt or electronic receipt. According to PayPal Money Hub, these documents are sent electronically through either email or text and can be accessed through online user portals. Access can be as easy as checking your smartphone.
Most of us will have a mix of both e-receipts (emailed or texted) and paper receipts (found shoved at the bottom of our purses or under the seat of our cars). The good news is that there is a solution to resolving this disconnect: transforming all past and future paper receipts into e-receipts.
Transform your Paper Receipts into E-Receipts
First, you will need to assemble as many paper receipts as you can for the current tax year. Check your bags, important files, and vehicles. If you have multiple copies or have the wherewithal to start this project before allowing your receipts to crinkle and get damaged, choose the receipt that is of the best quality; preferably a receipt that’s been printed on high-quality paper like thermal paper rolls receipt paper (which uses heat and not ink to print the receipt). This way, you’re more likely to save an accurate history of your expenditures.
Next, you’ll need to decide on a reputable scanning app that you can download and use on your smartphone. (There is also software for full-sized scanners for home offices; however, the accessibility of your cellphone just can’t be beat, so I don’t typically recommend this route).
- Start with smartphone scanning apps like the Smart Receipts: Expenses & Tax App available on Google Play, which not only scans your receipts, but also offers options such as tracking mileage and building end-of-period reports for an easier time at tax return time.
- Another option is the Expensify App available on Google Play and the Expensify iPhone App Store, which offers tools specifically tailored for self-employed individuals and small business owners.
Now, you’ll need to start assigning your expenditures to your business’s chart of accounts. While you’re doing this, make sure to maintain copies of paper receipts until you feel you’ve established a routine.
Seamless Integration into the Chart of Accounts
As a basic necessity, a business accounting chart of accounts should include: Assets, Liabilities, Revenue, and Expenses. Under the expense designation, the chart of accounts may look something like this:
- Expenses:
- Research and Development
- Advertising
- Gifts & Samples
- Marketing Expenses
- Payroll (including: Expenses, Benefits, & Taxes)
- Rent / Mortgage
- Utilities
- Property Taxes
- Insurances
- Auto Fuel
- Auto Repairs
- Professional Licenses
- Travelling (Rental Cars, Hotels, Entertainment, & Meals)
- Printing, Postage & Mail
- Phone and Internet
- Office Stationery & Books
- Legal, Accountant & other Professional Fees
- Equipment Leases & Maintenance
- Cleaning, Laundry & Supplies
- Donations
- Subscriptions
- Clothing / Uniform Costs
- Training Costs
- Banking Fees & Interest Expenses
Next, the information will need to go through one of the following routes:
Route #1 – AUTOMATION – Some types of smart receipts will seamlessly integrate this information with a company’s chart of accounts, even with a tailored list of expenses. In these cases, the purchase will be automatically categorized as one of the listed expense types at the time of the purchase. (For example: an e-receipt for USPS Stamps will automatically generate an entry in the “Printing, Postage & Mail” expense category in the user’s accounting software, at the time the sale goes through).
Route #2 – SCHEDULED RECONCILIATIONS – When automation is not available, the purchasers may elect to update the expenses on scheduled weekly, biweekly, or monthly reconciliation dates. This will require a quick review of each e-receipt and an update to the purchaser’s accounting software, like QuickBooks.
Route #3 – FORWARD THE INFORMATION TO THE ACCOUNTANT. Please note that this option may be costly and administratively burdensome.
What are the Benefits of Smart Receipts to Bookkeeping?
Scanning and itemizing your receipts may take a little getting used to, but the benefit of using smart receipts to your bookkeeping is unmistakable.
- It reduces so much paper clutter, minimizes your short-term and long-term storage requirements, and helps the environment, which is always a bonus.
- A major benefit of using smart receipts with your bookkeeping is that it forces you to face your spending history. It also allows you to self-manage your financial spending, forcing you to monitor your budget and to think about your finances as a big picture.
- Personal and company financial health will be less of an unknown, with real-time financial health and planning tools accessible and consistently monitored.
- E-receipts provide the opportunity to track expenses, allowing you to concentrate on cost increases, budget-cutting opportunities, and areas of concern.
- The use of smart receipts gives the user options to search bookkeeping records using specific filters and make end-of-reporting period reports. This makes bank reconciliations, accountant information reports, and tax year reporting effortless. A streamlined workload saves time and money in the long run. Especially with tax preparation, it allows you to ensure promptness and accuracy while helping maximize your deductions and rebates.
- Most reputable smart receipt software and interactive software offer personal information protection and data encryption. Much more protection than a paper receipt balled up in the bottom of a pocket.
Smart Receipts, Smarter Bookkeeping: The Bottom Line
Smart receipt management transforms bookkeeping from a disorganized paper chase into a streamlined, insight-rich process. By digitizing every printed receipt, you can gain instant access to accurate data that is not only searchable but feeds directly into your chart of accounts.
Automated categorization, scheduled reconciliations, and encrypted storage decrease clerical hours, shrink physical clutter, and help with compliance. More importantly, real-time visibility into spending patterns can empower smarter budgeting and faster decisions that will protect your profit margins.
Whether you are a freelancer or a member of a finance team, adopting e-receipts today is a small shift that delivers efficiency, sustainability, and peace of mind tomorrow, too.
You may also like to read,
- The Secret Behind Receipts: Types of Paper That Power Every Transaction
- From Chaos to Clarity: Outsourcing Bookkeeping for Business Turnarounds
