Increasingly, paper receipts, though dominant, are losing popularity due to a more attractive alternative: digital receipts.
A digital receipt can solve all the pitfalls of a physical one, thus making itself a superior solution. But where exactly do traditional methods fail?
This article lists three major disadvantages of paper receipts. Also, we include our recommendations for finding the right receipt management software for your business.
Why is receipt management important?
A receipt is a document that acknowledges something has been transferred, in other words, it logs a transaction between two parties, recording the change in ownership.
Typically, a receipt includes the following information:
- The date and time the transaction occured
- The number of items purchased or the service performed
- The price
- The time and location of each party
- VAT charged (if any)
- The method of payment
All the necessary information within a transaction is present on a receipt. Therefore, this creates a transparent transaction and should prevent any misunderstandings and disputes between parties. It is also a necessary item if you want a refund or wish to exchange your purchased item.
Regarding tax deductions, receipts serve as proof of expenses. Countries vary in their tax reporting, but most require some document to prove how much you have paid. In the US, the IRS requires receipts for certain expenses when filing taxes.
- Why Are Bank Receipts Important to Every Business
- Sales Receipts: 4 Types And Why They Are Essential To Your Business
How are businesses doing receipt management?
There are five receipt management systems that individuals and businesses normally use to handle their receipts.
We list the 5 types of receipt management solutions and the time each takes for businesses to process, according to this study:
1. Paper receipt management
By far the most time-consuming, paper receipt management takes on average 13.9 minutes.
2. Photo/scan receipt management solution
On average, this takes 9.2 minutes to process and file. Examples include mobile screenshots or pictures taken with a digital camera.
3. Apps with receipt management technology
The average for apps with receipt management tech was 4.9 minutes.
4. Apps with auto-match receipt management
Average time with apps that have auto-match receipt management: 2.8 minutes.
Auto-match receipt management refers to AI tech that sorts and categorizes receipts based on preset rules and categories.
5. Direct receipt management solution
Except for the paper receipt management method, all of the other methods listed above are digital, which has become the norm due to efficiency increases.
What are the disadvantages of paper receipts?
A physical receipt may appear practical and simple on its surface. After all, every store provides its customers with paper receipts, so why bother changing to digital receipts?
But sticking with paper receipts has its cons.
1. Paper receipts take up physical space.
One receipt might sit well in your pocket. But five receipts do not, let alone a hundred receipts.
One receipt is too small for us to immediately acknowledge that it is gone. And if you do come across it, you might not remember what it’s for. By going digital, you will need only one device to keep track of all your receipts.
2. Paper receipts deteriorate over time.
Receipts are made of thermal paper, with some layers of special coating. Still, they fade away with time, like many other kinds of paper. There are tips on how to keep receipts from fading. But these tips only delay the fading process. By going digital, your receipts will be preserved in the right condition in case you’re ever audited.
3. It requires effort to locate a specific receipt.
It’s hard to find the right piece of paper in a pile containing thousands of others. Even in the most organized workplace, it can still slow down your efficiency.
A digital document archive with a powerful search function will improve your team’s productivity. Receipt management software helps you reduce time finding documents, thus staying focused and engaged in more important tasks.
What is the best digital receipt management solution for your business?
There are many digital receipt management software options on the market to choose from, such as Shoeboxed, Expensify, and Zoho Expense, to name a few. With several choices, you may wonder what software is the right one for your business. Look to your business model and needs to make the right choice.
The receipt management software developed by Shoeboxed is an ideal tool for small business owners and independent contractors that want a receipt management system that can help them prepare for tax season.
Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format with just 1-click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease.
Stay audit-ready with Shoeboxed for FREE now!
For more on what Shoeboxed can do, check out these articles:
- How to Track Mileage for Tax Deductions with the Shoeboxed App
- The Ultimate Receipt Organization & Management Resource
- How to Scan Receipts With the Shoeboxed App: A Step-By-Step Guide
- 4 Easy Ways To Upload Your Receipt Images To Shoeboxed
- 5 Best Ways to Store Your Business Cards
Shoeboxed supports multiple methods for receipt capture: send, scan, upload, forward, and more!
You can stuff your receipts into one of our Magic Envelopes (prepaid postage in the US). Use our receipt app (iPhone, iPad and Android) to snap a picture while on the go. Auto-import receipts from Gmail. Or forward a receipt to your designated Shoeboxed email account.
Turn your receipts into data and deductibles with our expense reports that include IRS-accepted receipt images.
Join over 1 million businesses scanning & organizing receipts, creating expense reports and more—with Shoeboxed.
Try Shoeboxed for FREE now!