Businesses receive receipts from different sources. Receipts are documents that show proof of payment of a business. Usually, businesses receive receipts for cash or card transactions with third parties. For example, a business may receive a receipt for purchasing office equipment from a local store. For transactions with suppliers, businesses usually receive invoices. Invoices are also similar to receipts, but they are not proof of payment. Usually, businesses receive invoices for credit transactions rather than cash transactions.
Businesses must keep and organize receipts. Especially for small businesses, where the number of cash transactions is higher than other businesses, receipt organization is a vital process. There are many reasons why small businesses need to organize their receipts. For example, these businesses will need to produce receipts during tax audits. Similarly, receipts may be necessary for an internal analysis of the business.
There are different systems for storing and organizing receipts for small businesses. These businesses may either store and organize the receipts manually or electronically. For some small businesses, electronic receipt organization may not be an option as it comes with higher costs. However, electronic processing of receipts can be helpful in the long term. The receipt organization process of a small business will differ according to the system that the business employs.
Generally, organizing receipts for smaller businesses will consist of the following steps.
Storing receipts
Storing receipts can be challenging in both paper-based and electronic systems. For paper-based receipt organization systems, organizing receipts requires a disciplined and punctual approach. The storage system in a paper-based system may also be more challenging as it requires the business to have a strict internal control system. Businesses can use files and folders to stay organized in this system.
In an electronic storage system, a business needs to scan the receipts first using a dedicated scanner or smartphone apps. Scanning will also require some time from the employees. Once the scanning is complete, the business can upload the receipts to its accounting system. Before uploading the files to its accounting system, it may need to check these files for accuracy.
Marking receipts
The next step in the organizing receipts process is marking receipts. Marking receipts means coding the receipts according to the coding system of the business. Mostly, businesses code receipts using sequential numbers. However, businesses may also have more complex coding structures for their documents. Marking receipts helps with the traceability and linking of receipts. Similarly, coding receipts sequentially or according to other coding systems can be a vital part of the internal controls of a business.
In a paper-based system, the receipts would follow a manual numbering system. Usually, business records receipts in its accounting system using vouchers that are pre-numbered. It can assist the business keep track of its receipts. In an electronic system, the accounting system of the business will automatically take care of marking of receipts.
Processing receipts
Once businesses mark their receipts properly, they will need to process the receipts. Processing a receipt means extracting useful information from it. For example, businesses can extract the type of expense the receipt relates to, the amount of the payment, the vendor, the date, etc. This allows the business to use the information for further processing.
Similarly, processing receipts may include verification and authorization of receipts. For example, some businesses may require receipts above a certain amount to be authorized by senior managers. In a paper-based system, processing receipts may take a long while. While the structure of small businesses should allow for quicker processing, it will still be slower than in an electronic system.
Categorizing receipts
Categorizing receipts is also a crucial part of the process of organizing receipts. Categorizing receipts allows a business to trace any receipt, using different filters. It may also be helpful to categorize receipts for reporting purposes. Categorizing receipts can be based on different factors. This process also depends on the successful completion of the processing of receipts.
In a paper-based organization system, classifying receipts into different categories may be a hectic task. This is because this system uses a manual approach to processing of information. Therefore, it can take a long time for an employee to categorize each receipt individually. In an electronic system, categorization of receipts is automated based on the vendor, month, amount, type, etc. of these receipts.
Conclusion
Receipts are documents which business receive when they pay for a product or service. Usually, businesses get receipts for cash transactions. There are many reasons why businesses, especially small businesses, need to organize their receipts. Usually, businesses will either employ a paper-based organization system or an electronic one. Organizing receipts start by storing the receipts in the system. Once businesses store these receipts, they will need to mark the receipts. After marking them, businesses process the receipts and categorize them for further use.
