It’s not new to businesses, accountants, and even individuals who want to keep track of their expenses that receipts are extremely important. In the business world, paper receipts, though dominant, are losing popularity due to an alternative, digital receipts.
A digital receipt can solve all the pitfalls of a physical one, thus proving itself a superior solution. But where exactly do traditional methods fail?
This article lists three major disadvantages of paper receipts. Also, you’ll find suggestions 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, a transaction between one party to another. Ownership is changed as a result of receipts. Typically, a receipt includes the following information:
- The date and time the transaction happens
- The number of items purchased or the service performed and 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. You may have noticed that a receipt is a precedent if you want a refund or exchange.
Regarding tax payments, receipts are even more important as they 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.
There are several types of important receipts, see also if you are interested:
- 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: paper receipts, photo/scan solutions, apps with receipt capture technology, apps with auto-match, and direct receipts. According to a study, the time spent on receipt management with each method is as follows:
- Paper receipt: 13.9 second
- Photo/scan solution: 9.2 second
- App with receipt management technology: 4.9 second
- App with auto-match: 2.8 second
- Direct receipt: 1.3 second
Except for the first one, all of the other methods are digital. The norm now is that many businesses are digitizing their receipt management, which saves them a potential amount of time.
Disadvantages of holding onto a physical receipt
A physical receipt may be practical and simple, something we have been too familiar with. And old habits die hard. Every store provides its customers with paper receipts, so why bother changing to digital receipts? Plus, a person may be more likely to look at and examine a paper receipt, double-checking if anything goes wrong with the transaction.
But resorting to paper receipts brings more troubles than benefits.
1. Take up physical space.
One receipt might sit well in your pocket. But five receipts do not, let alone a hundred receipts. Eventually, with hundreds of thousands of receipts that businesses, even small ones, come into every year, it is indeed very space-consuming.
With too many in one place, they are more prone to getting lost. One receipt is too small for us to immediately acknowledge that it is gone, too little for anyone to come across it to remember. Going digital, you need only one device to keep all the receipts.
2. 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 several tips on storing them correctly, thus, preventing them from fading.
These tips can only delay the fading process, storing the receipts for a few more years. Thermal paper deteriorates anyway. Going digital, you do not have to do anything special, and receipts are still there after years.
3. Require 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 puzzle anyone searching for things, slowing them down.
A digital document archive with a powerful search function will greatly improve one’s productivity. Receipt management software helps you cut off lots of time finding documents, thus staying focused and engaged in more important tasks.
Finding the right digital receipt management solution for your business!
There are many digital receipt management software on the market to choose from, Shoeboxed, Expensify, and Zoho Expense, to name a few. With several choices, you may wonder what software is the right one for your business. The answer doesn’t lie only in the software features but also in your business model and needs.
The receipt management software developed by Shoeboxed is an ideal tool for small business owners and managers.
Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one 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. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.
You might also be interested in: Top 5 Receipt Scanner and Organizer Apps for Small Businesses in 2021
The bottom line
Space-consuming, susceptible to deterioration, and difficult to access are paper receipts’ three most visible cons. Now that you know the disadvantages of physical receipts, it is now the time that you switch to digital solutions. This may be the best solution that you make for yourself and your business.