How to keep track of receipts for business purchases

As a business owner, you know it’s essential to track your expenses. That includes keeping up-to-date with your receipts and invoices before they take over every corner of your office. In this guide, we share our top tips on how to keep track of receipts for businesses.

It’s pretty normal to find yourself playing catch-up with your receipts. Over the course of a year, you’ll likely make loads of purchases – new laptop, office supplies and business travel (although these days it’s more like Uber-ing to a local client or jumping on Zoom). Tracking these transactions is critical for financial and tax reasons, and organising your receipts makes life a lot easier and simpler.

An easy way to stay on top of this is through receipt-tracking apps, which can help you digitise your documentation and calculate your expenses. Although these apps do most of the heavy lifting in terms of how to track receipts, businesses still need to maintain best practice when it comes to tracking paperwork. Figuring out a solution that works for you and your business will keep you from losing your receipts and save you from having to dig through a pile of receipts come tax time (we’ve all been there).

Why do businesses need to keep their receipts?

Tracking business expenses helps you stay on top of your budget, understand your costs, and ultimately have more control of your profitability. Knowing how to track receipts is an important part of your business processes and finance function, but it can also help keep your tax bill down. For example, to claim goods and services tax (GST) as a business, you need to have an invoice or receipt.

Without a receipt, GST is not claimable and assumptions may be made and GST claimed incorrectly. If you miss an expense, your profits could end up looking bigger than they are, and you end up being taxed for your mistake. In saying that, your receipts need to be for tax deductible expenses (in other words the ATO needs to agree the spending was necessary).

What are best practices for receipt tracking?

A lot of business owners miss out on claiming expenses properly because they lose receipts or forget to ask for a receipt in the first place. One of the worst things you can do is throw your receipts away or put them in a ‘go through later’ drawer. Most of the time, later never arrives or you end up passing on a box of loose receipts to your accountant, upping the time they have to spend on your books. Invoices can easily get lost in email chains and end up not being dealt with properly or miss being passed onto account departments.

One way to deal with this is to keep a separate folder for business paper receipts and invoices that you reconcile at the end of every day. If you can’t quite bring yourself to commit to this, or if making a business purchase isn’t a daily occurrence, set aside a weekly time to put receipts away. Friday afternoons are an option (if you’re not already having work knock-offs – and no, you can’t claim those). We recommend adding this as a recurring appointment on your calendar, regardless of the frequency you choose.

Have you tried receipt-tracking apps?

Receipt-tracking apps can really help simplify organising and documenting your receipts and business expenses. The best receipt tracking software integrates with accounting software, simplifies transaction itemisation and gives you a high-level view of your business costs.

The best receipt tracking software automates some of the more tedious aspects of document organisation like calculating and categorising expenses (we get it, not everyone’s as excited as we are about expense reports and taxes). Make sure you choose an app that uses Optical Character Recognition (OCR). Our clients generally use two receipt-tracking apps: Dext (formerly Receipt Bank) and Hubdoc.

How receipt-tracking apps work:

• You scan receipts onto the mobile app using your phone camera or have the receipts/invoices emailed to you in a photo (supplier invoices can be sent via email directly to the app)
• Once you’ve scanned the receipts or been sent an invoice, OCR technology automatically reads and inputs information such as invoice number, date, due date, GST, total expense and contact/supplier without the need to enter this data manually
• They can also detect duplicate invoices to ensure accuracy, and allow users to set up supplier rules for repeat suppliers such as account codes, due dates and Xero invoice status

We personally recommend Dext as it has an excellent OCR, intuitive search functionality and a great audit trail. There’s a wide range of options in terms of overall system settings, which allows you to create rules based on who’s sending the information through to Dext. It also integrates really well with Xero, reads bank statements and converts them to CSV files with high accuracy.

Hubdoc is a low cost option that is included with most Xero subscriptions and it integrates well with document management systems like Dropbox, Google Drive and Xero and also has customisable settings.

Good to know: Receipts fade over time (before they’re inevitably lost). That’s why it’s best to get in the habit of scanning your receipts into your receipt-tracking app or accounting software right away. That way you don’t need to keep the physical copy at all and can pop your receipts straight in the recycling bin

Taking the time to figure out how to keep track of receipts for your business efficiently will save you time – and headaches.

Tax time is hard enough as it is without having to sit down with a pile of scrunched up receipts on your kitchen table, trying to figure out which receipts are for which expense. Try Dext (we recommend paying for the premium features and yes, you can claim that) – and let us know what you think. If you need help getting started, we’re more than happy to help.

Tracking profits is fun… receipts not so much. But it's just as important to create a system for tracking receipts that works for you and your business. If you’re overwhelmed by a pile of receipts overflowing from a shoebox, or struggling to stay on top of reconciling your expenses, book in time to speak to Project Alfred – our expert accountants and bookkeepers will find a solution that suits you.

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