Receipt Collection – the Box? the Bot? or a Better way?

If you’re old school, aren’t digitally inclined or if you’re accustomed to using cash as your primary preferred payment, then the box of receipts has probably been your go-to method for collecting your business expense data for financial and tax planning.

Then there are those on the other side of that spectrum, turning to all things digital whenever possible and perhaps even using AI to go through your card statements and receipts to categorize and organize your business expenses.

Which is right? Should we go all digital? Should we get rid of the receipts all together?

There is no cut and dry, right or wrong. But the better way is actually … both! Let’s see why and some best practices to follow.

You still need receipts!

If you are trying to minimize clutter, then the paper receipts might drive you nuts but you’ll still need them. There are times when purchases are made with a vendor that provides several products and/or services that will match several categories. The best example of this is your typical box store. Whether in person or online, they have a variety of selection that can fit multiple categories and will not be super obvious to an AI assisted categorization. Only YOU know the nuances to each purchase, the occasion and exactly how YOU want the items categorized. In order to remain compliant and properly prepared in case of an audit, you’ll NEED those receipts to prove your case.

AI assistance is faster

Yes, the bots, AI’s and whatever other digital assistance used can make the tasks in general much faster. So, there are definite benefits for implementing this tool in your expense collection and categorization. Most bookkeeping software provide options to automate categorization for certain transactions that will commonly end up with the same labeling. But even so, be prepared to review and confirm for those off beat occasions that a personal expense creeps in or mislabeling simply because YOU know the context of the purchase much better.

Also be aware that when using automated synchronization with your bank feeds, it’s best to start small while the number of transactions are within a few pages in order to be sure it’s doing its job well. Sometimes, the time-savings anticipated is forfeited by the constant double checking, re-labeling and fixing of transactions. Also take into consideration having to routinely check that your synchronizations are active and that whatever methods of two-factor authentications used are available. When there is staff turnover and it’s tied to someone’s cell phone or email, it can be a nightmare to reset any synching of data transfer.

Smarter Strategy, Better Results

This is just a surface level, tip of the iceberg of things that could happen or not happen when needed. But making use of the best of both worlds can really help maintain efficiency and ensure accuracy in your final results. For example, those paper receipts can be scanned to have on file as a digital backup to your transactions. There are a few apps out there that can use your smart phone as a scanner to accomplish this task. One of the ones we like using is Fetch. Scan receipts, get points, redeem for gift cards and best of all, it allows you to share the info to your accounting software or cloud backup drive. Now getting prepped for receipt collection can be fun and a financial savvy move! (see our other articles on this) Take it a step further and make use of your bookkeeping software’s option to link the scanned image directly to the transaction for future reference, which is quite handy with less clutter!

When using automation, start small and gradually increase the scope of data your AI will be reviewing. For example, instead of loading up an entire month’s worth of statements, have the file downloaded and have it review one page at a time. Then when performing your own quality control measures, it will be much more manageable and less overwhelming.

Better yet, have a bookkeeper on hand that will be part of your financial team! Let’s face it, unless you’re in the business of bookkeeping, your zone of genius lies elsewhere so your time and energy shouldn’t be tied up in tasks that are better suited for the pros. You don’t do your own surgery, so don’t do your own books . . . and definitely not your own taxes either!

If you need help with this or would like more information,reach out to our team of solutionists to get the financial support needed.