Why Digitizing Receipt Management Is Vital? 3 Major Disadvantages of Paper Receipts

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: 

Receipt management.

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.

Receipts deteriorate over time.

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.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

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. 

Does The IRS Accept Receipt Scan for Tax Deductions?

As the 2021 tax season comes to an end, the stress is starting to creep up on business owners. Preparations can be taxing on business owners, often involving numerous steps. This includes double-checking accounting records, going over their tax claims to make sure the final numbers are correct, and sorting through piles of receipts that they’ve hung onto to submit to the IRS. If you’re looking to streamline this process by digitizing your receipts, you may be wondering—does the IRS accept your receipt scans? can receipt scans legally support your tax write-offs the same as original paper receipts? 

We are here to put your mind at ease. 

The short answer to your worries is yes. Receipt scans are 100% legitimate and approved by the IRS. In fact, the IRS has accepted scanned and digitized receipts as valid tax records for tax purposes since 1997! As such, scanned receipts must meet certain requirements in order to be eligible. 

Read on to find out if your receipt scans have met all of the IRS’s requirements. 

What are the requirements for a receipt scan to be accepted by the IRS?  

According to the IRS, digital or scanned receipts must meet the following requirements:

  • Receipt scans are completely identical to their original versions.
  • Each receipt scan must exhibit a high degree of legibility and readability. 
  • You must be able to provide hard copies of the scanned receipts in the event of an IRS audit.
  • Scanned documents must be stored in a secure place.

If you can ensure your scanned receipts are properly stored and backed up, and you can reproduce hard copies from them in a legible, readable format, you may dispose of the original receipts. 

You might also be interested in: Understanding the IRS’s Tax Underpayment Penalty and How to Avoid It.

What is the most effective way to scan your receipts? 

If you’re looking for an easy and convenient way to scan your receipts, Shoeboxed is what you need. Since 2007, Shoeboxed has helped many accountants, freelancers, and businesses scan, digitize and store their receipts safely in the cloud. Simply scan your receipts with your phone with just a click, and perfect digital versions of your paper receipts will appear in your Shoeboxed app!

On top of that, Shoeboxed automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. 

In case you have too many receipts and too little time to deal with them, send your piles of documents using the Shoeboxed Magic Envelope, and the Shoeboxed team will take care of the rest. Just send and watch them transform into organized digital data.  

Quick, reliable, and trustworthy, Shoeboxed guarantees that the digital versions of your receipts are in precise format, audit-ready, and accepted by the IRS in the event of an audit.
Try Shoeboxed right now and get 25% off all plans

What Is a Purchase Receipt and How to Make One?

As a business owner, you have to deal with numerous receipts every day. While it’s important to store and keep your receipts organized for accounting and tax purposes, many often neglect or find it difficult to systemize hundreds of documents. However, you can easily get your receipts categorized and neatly stored with some effort and the right knowledge.  For example, you might want to try sorting receipts by type such as sales receipts, travel receipts, bank receipts, etc. This article will look in detail at a very common type of receipt — the purchase receipt. 

Once you know the features of a purchase receipt, you’ll be able to distinguish them from other types of receipts, ensuring a smooth and orderly system of storing your receipts. On top of that, you will also find useful tips on how to create a purchase receipt if you are a supplier as well. 

What is a purchase receipt?

When you receive materials, goods, and services from a supplier, they will issue you a purchase receipt. This is normally done against a purchase order. However, some suppliers still give you purchase receipts without one. Purchase receipts can be printed directly from a cash register or handwritten.

What is the purpose of a Purchase Receipt?

A purchase receipt mainly serves as proof of ownership. This receipt is issued when you accept and pay for goods and services from your suppliers or from you to your customers when they buy your products.

Generally, this document includes details of a specific purchase of a service or product. It also clarifies the contract between you and your suppliers – what, how many, and how much you buy. 

Purchase receipts are also kept and recorded for accounting purposes. You can always go back to examine and double-check if the details of transactions tally. By being able to do so, you will keep track of your expenses more accurately and timely and ensure your accounting system runs more efficiently, which leads to better business results. 

See also:

What information is on a purchase receipt?

Though it varies between businesses, a purchase receipt normally includes the following information:

  • Date and time the transaction occurred
  • Customer information: company name, possibly a contact person, address, phone number, and email address.
  • Purchase description: date, purchase order number, quantity, a brief description of each purchased item with prices
  • Payment information: payment method 
  • Additional charges: shipping fee, delivery cost, and taxes
  • Return policy. Detailed explanation on how the customer may return, exchange, and/or receive a refund for a purchase

What does a Purchase Receipt look like?

Below is a basic template of a purchase receipt:

Example of a purchase receipt
Source: Templatelab.com 

A purchase receipt is fairly straightforward, so you can easily customize a template for your business using Microsoft Excel. Many websites on the Internet also have free downloadable templates for purchase receipts. If you need a free Purchase Receipt template, check out these links below:

Another way to issue purchase receipts is to use paper receipt books. They are widely available online and easily found on Amazon. 

How do you write a Purchase Receipt?

There are two main ways to create a purchase receipt: manually (by hand) and digitally. 

Write it manually 

Make sure you have a printed template ready or a receipt book that looks professional. It’s fairly easy to create a purchase receipt this way as you only need to fill in the blanks with the relevant specific details. Keep your handwriting neat and tidy to avoid any unnecessary misunderstandings. Also, don’t forget to double-check your calculations!

Write it digitally  

If you already have a good template prepared, just type in the transaction information whenever you get a new order from your customers and have the receipt printed out. A great tip is to save your regular customer’s basic information in the template, like their company’s name, address, and contact information. Then, you won’t have to spend time typing that information all over again the next time they buy from you. 

Alternatively, you can download and use specialized accounting software like Quickbooks, Xero, etc., to create purchase receipts. It may be difficult to get the hang of it at first, but once you get used to it, you will enjoy the convenience and effectiveness it brings.  

What is the difference between an invoice and a receipt?

A receipt indicates payment of the items and that the sale is complete, while an invoice serves as a payment request. They both include details of the products ordered, prices, taxing information, contact details, and credits. 

What’s Shoeboxed? 

Are you tired of seeing paper receipts laying everywhere in the office? 

Shoeboxed can help you. 

Shoeboxed is an online application that helps you clear your piles of documents by creating digital copies in just a click. This app automatically extracts and categorizes important data from your receipts, which then gets approved by a team of data experts. You can scan their receipts, manage expenses, store business cards, and track business mileage easily, helping you boost productivity and bring in more revenue. 

Quick, reliable, and trustworthy, Shoeboxed guarantees it will organize your receipts in the best way possible! 

Go paperless for FREE with Shoeboxed