Collecting, storing, and otherwise managing receipts is essential to a well-oiled expense reporting machine.
Each receipt serves as confirmation of payment processing between yourself and the customer or vendor. You also need expense and sales receipts to file taxes and maintain your peace of mind.
Unfortunately, while saying receipt management is easy, the whole process itself is daunting. Tracking hundreds, thousands, even millions of employee and customer receipts leaves loopholes for fraud and misreporting.
Physical expense receipts are especially susceptible to being lost, damaged, or fading with time.
Fortunately, there’s a better way to do it: digital receipt management with Pluto.
- Automate more of the expense management process
- Reduce the risk of fraud and inaccuracies
- Create more efficient workflows and financial departments
- And overall streamline modern business operations
While you probably can’t eliminate 100% of paper receipts from your workday, you can still improve your process with an increasingly-digital footprint!
What is Receipt Management and Why Do You Need It?
Receipt management is the process of collecting, tracking, and storing business receipts.
Traditionally, receipt management is handled by internal finance teams. These employees collect various receipts, track costs in your accounting software, and store them for later. If necessary, the accounting team will also manually sort each expense.
A well-run protocol helps businesses:
- Simplify employee reimbursement programs
- Track and report tax deductions
- Provide proper proof during a tax audit
- Streamline expense reports and budgets
- Combat internal fraud and inauthentic chargebacks
- Avoid eating repair or replacement costs for items under warranty
- Calculate and improve long-term profitability
But there isn’t just one kind of receipt management system. Today, businesses have to wrestle with printed receipts, e-receipts, and even (gah!) handwritten receipts.
The mix is frustrating for businesses that have to follow several procedures just to reconcile the books.
Difficulties of Manual Receipt Management
Today, there are three basic ways to handle receipts directly:
- Manual receipt management involves handling, tracking, and storing paper receipts
- Digitization receipt management scans physical receipts to digitize the tracking process
- Digital-only receipt management is used for online or digitally generated receipts
While many businesses are moving toward digitization and digital-only receipts, some businesses are stuck in the dark ages. (The kind that involves typing physical receipt information into a digital spreadsheet.)
And as we’ll see below, manual entry strategies come with some…problems.
Easily Lost or Damaged Receipts
Perhaps the most obvious problem with physically tracking expense receipts is that there’s so much that can go wrong. Lost, damaged, or faded receipts make the business expense tracking process that much harder.
Even if the employee who spent the money doesn’t drop their receipt, it’s possible for paperwork to get lost on a desk somewhere. And if you need to find a receipt two years later? Better hope it was filed properly and hasn’t faded completely.
Consumes Human Resources
Manual receipt management is an extremely hours-intensive process.
Your financial team has to collect invoices, type their data into your accounting software, and double-check their work. Then, they have to reconcile business expenses against company credit card statements and track down potential instances of fraud or misreporting.
Not only does this require a lot of time, but it also impacts employee productivity. Every hour an accountant spends tracking receipts is an hour of productivity lost elsewhere.
Leaves Room for Human Error
Aside from the time and human resource cost, manual receipt management presents the potential for human error. And unlike on the product line or in customer service, every reporting mistake risks an unfavorable tax audit.
Even the simplest receipt management and tracking process involves several steps from collection to reconciliation. Every stage is an opportunity for an employee to get distracted, mistype a name or number, or duplicate entries. In bigger cases, they might even duplicate a payment, costing you more money.
And even if you catch the mistakes before they’re submitted, that’s more human hours wasted double-checking and correcting completed work.
Increases Fraud and Misreporting Risk
The risk of fraud is higher in manual receipt management programs, and instances of fraud may be harder to detect. Types of fraud that commonly crop up in expense reporting include:
- Inflated claim amounts
- Claiming personal costs on the business’ dime
- Submitting expense reports twice
- Falsifying “proof” to claim for money that wasn’t spent
Unfortunately, manual receipt management makes these kinds of fraud more likely and difficult to catch. For example, if the employee who authenticates receipts is committing or permitting the fraud, it’s harder to detect until after you’ve lost money.
Over time, even small acts of fraud can have massive financial consequences.
Contributes to Employee Dissatisfaction
For many companies, employee reimbursement programs contribute both to the need for manual receipt management – and to employee dissatisfaction.
Think about it. In a modern, tech-savvy business world, why should employees have to pay out of pocket, ever?
Virtual cards and online-based businesses have all but eliminated the need for an employee to front your expenses.
But if you’re still stuck doing manual receipt management, chances are, your employees are still submitting reimbursement tickets. (And grumbling about the time it takes to get paid back.)
And that’s not even touching on the frustration, tedium, and headaches manual receipt management programs cause your high-paid finance teams.
Jacks Up Business Costs
Together, all these factors paint a picture of increased business costs.
The time and human resource cost to track, reconcile, and store receipts.
The human and financial cost of detecting and counteracting fraud.
Even the maintenance costs for your printer and filing cabinets.
Every dollar spent on manual receipt management is a dollar sucked from office parties, growth, or your bottom line.
Benefits of Digital Receipt Management
It’s easy to see the costs that manual receipt management impose. Fortunately, there’s a simple solution: digital receipt management.
In short, digital receipt management involves using digital copies of receipts in your expense reporting strategy. Digital smart receipts are easy – simply integrate them into your accounting software and let automation take you away.
But even physical sales receipts can be digitized, Pluto allows you to digitize your receipt very simply - through your phone.
Incorporating such technology means that even paper receipts fold neatly into your overarching digital strategy.
And as you’ll see, the process comes with tons of benefits.
Increases Integration Potential
A massive benefit of digital tracking is the sheer integration potential. Most receipt management tools, from receipt scanning devices to receipt tracking software, easily mesh with your existing expense reports system.
From there, you can automate mindless tasks and set up occasional human checks to ensure the system works as intended.
Fewer Costly Errors
Another way that a digital receipt management program saves costs is by reducing employee errors. Digital receipts should meld seamlessly into your tracking system – no surprises there.
But even processing physical receipts is cheaper and easier.
With their mobile phones, employees can scan receipts and upload them instantly. From there, Pluto categorizes the information and adds it to the overall report.
While employees may spend a second filling in any blanks, increased automation greatly reduces the risk of input errors.
Reduces Risk of Fraud
Less human interference means your financial system is more resilient to fraudulent activities. Pluto improves speed and accuracy while digitizing the receipts.
That leaves fewer opportunities for fraudulent claims.
Uploading physical receipts means less physical space is needed for storage. That can save you on storage costs and reduce desktop and file cabinet clutter.
And because everything’s digitally maintained, you’ll still meet or exceed your tax authority’s required financial record storage period.
Not to mention, just finding your records will be easier than ever!
No person or business enjoys tax season. But digital management makes the process at least a little easier.
Because all of your information is stored online, it’s easier to access and export receipts as needed.
When tax time or the dreaded audit comes around, your data will be well-organized and easily accessible.
More Efficient Expense Reporting
Traditional receipt management is a costly, time-intensive, error-prone manual process that used to be necessary. With modern tools, businesses can streamline the entire financial structure of their organization.
No more lost receipts or worrying about fraud.
Less time spent inputting and double-checking data, and more time helping your business grow.
All these positive benefits will improve efficiency – and even bring smiles to your accountants’ faces.
Like using a virtual corporate card, digital receipt management speeds up the reimbursement process.
Since everything is tracked and verified electronically, it’s easy to set up an automatic or streamlined reimbursement protocol.
Putting Your Eco-Friendly Foot Forward
Lastly, any step your business can take toward going paperless is good news for the environment.
Cutting down fewer trees and reducing printer ink usage are laudable goals that can decrease your environmental footprint.
Not only will you enjoy cost savings, but you’ll feel better about doing business in an increasingly eco-conscious world.
8 Tips for Efficient Receipt Management
Digitizing your receipt management strategy is just the first step toward expense report success. To ensure you’re operating at maximum efficiency, consider the following tips.
1. Use Pluto App
The first step is to get Pluto and start managing your spending digitally.
While you’re moving toward digital efficiency, your vendors aren’t required to follow. Keeping the proper tech on hand ensures you can digitize any paper receipts that come your way.
Pluto allows you to take a picture of the receipt, upload it to your expense and just like that the reconciliation process is done!
2. Save Your Receipts
While you can set up secure digital folders to store all your digital originals and copies - Pluto does that for you!
Just take a picture of the receipt, upload it to the app and that is it.
3. Ensure High-Quality Digital Format Uploads
There’s no point in uploading and saving documents if you can’t read them.
Before tossing your physical copies, make sure you can clearly read the essential information on each receipt. (Such as the company name, date, purchased item(s), and amount.)
4. Categorize Submitted Expenses
Take some time to categorize your expenses (most businesses do this in chronological order). Pluto helps you with that, but just make sure to check the right category so the reporting stays in top notch condition.
5. Set Up a Simple Expense Report Strategy
Expense reporting is the backbone of any business’ financials. For prompt, complete reporting and tracking, ensure that you design a straightforward strategy.
Same-day submissions, fewer Excel sheets, and faster reimbursement protocols will improve efficiency and attitudes. Better yet, invest in a quality expense and receipt management software.
Or even better - start with Pluto, we have a free package. It will allow you to completely digitize and control your spending, while keeping your reporting in the best possible shape.
6. Establish Accountability
A top-notch expense reporting strategy only works if people use it.
To ensure your protocols are followed, emphasize and encourage accountability. Keep all managers and supervisors up-to-date with company spending and card policies and remind them to disseminate that information appropriately. Follow up with employee expenditures as needed.
7. Run Regular Internal Audits
Regular expense report audits help businesses track receipts fraud, clear up discrepancies, and streamline inefficiencies.
Take time each month or quarter to check for fictitious or overblown expenses or troubles with your expense reporting strategy.
Pluto allows you to run real-time reports at any given moment for any period of time.
8. Switch to Virtual Corporate Cards
Virtual corporate cards make managing receipt tracking even easier. Not only can you digitize the entire process end-to-end, but corporate cards give you greater control over your expenditures and tracking.
Sure, you can’t prevent vendors from handing you physical receipts. But you can greatly minimize instances of employees walking in with a big stack of thermal paper to scan in.
Pluto offers unlimited virtual cards which will book all your expenses right into the dashboard!
- Proper receipt management is key to running a financially successful business.
- While manual receipt management reconciles physical copies, it’s increasingly unnecessary in an increasingly digital world.
- Digital receipt management simplifies the collection, reconciliation, and storage process.
- Digital tracking also reduces fraud potential, time and financial waste, and increases employee satisfaction.
- Digitizing your expense reports pairs nicely with digitizing your own payments with virtual corporate cards.
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