In launching Enkel, I have learned a great deal about cloud-based technology and how it is revolutionizing how small business owners do their books. There are tools for everything - cash flow management, accounts receivable follow-up, and for tracking your receipts.
Early on, I was introduced to Expensify, as one of my earlier clients used this receipt-tracking software extensively. It was not until I started using receipt tracking software called Receipt Bank that I realized how powerful these tools can be.
Since launching Enkel, I had not actually recorded any of my day-to-day expenses in the accounting system. Like many of my clients, they accumulated in a pile, and that pile kept on growing and growing.
Getting Started with Receipt Tracking Software
Within five minutes of installing my receipt tracking software, all receipts were scanned and thrown in the garbage, instantly decluttering my desk. With Receipt Bank, you do not have to keep your receipts, as the Canada Revenue Agency will accept receipts that are scanned using this software.
One benefit of receipt tracking software is that it uses Optical Character Recognition (“OCR”) to read your receipts, limiting the amount of data you need to enter manually. Expense management tools that come with popular cloud-based accounting systems like QuickBooks Online and Xero do not use OCR. Advanced receipt tracking software has more robust features to allow you to assign roles and control the types of expenses that can be added by employees.
I have been surprised at how accurate the OCR can be with these tools. For example, with a meal receipt, I took a picture of both the receipt and the credit card transaction slip at the same time. Receipt Bank accurately picked up the pre-tax total and sales tax from the receipt and the gratuity from the credit card transaction slip.
Once you have scanned the receipt with your smartphone, you can add it to an expense report or submit it directly to the accounting system. This assumes you are working with cloud-based software that integrates with the receipt tracking software. Once the expense report is approved, the accounting system creates a journal entry with the corresponding amounts recorded as expenses.
Challenges and Benefits of Receipt Tracking Software
Though cloud-based accounting system apps are better than their paper-based counterparts, I recently ran into a small problem with the Xero expense management tool. Xero does not allow you to limit access to approving and reviewing expenses by an individual. Instead, there are tiers of functionality that will dictate what a user can and cannot do. The problem I was facing was that one member of the senior management team reviewed everyone’s expense report except another senior manager. Both senior managers should have had their expenses approved only by the CEO. The problem is that by granting a senior manager approval privileges, he can now approve his own expenses and those of the other senior manager.
Receipt tracking software benefits small businesses by offering advantages to streamline financial management and improve operational efficiencies. Here’s an outline of these benefits:
- Improved Expense Management: Receipt tracking software automatically extracts key information from receipts, reducing manual data entry errors and saving time.
- Real-Time Tracking: Businesses can monitor expenses as they occur, providing up-to-date financial insights and helping to better manage budgets.
- Enhanced Record Keeping: Receipts are stored digitally, which is more secure and less cluttered than keeping physical copies. This also makes it easier to retrieve documents when needed.
- Compliance and Auditing: Digital records help ensure businesses meet the Canada Revenue Agency (CRA) requirements for record-keeping, making audits smoother and less stressful.
- Tax Preparation and Deductions: Software often categorizes expenses automatically, simplifying the process of claiming tax deductions.
- Accurate Tax Reports: Generates comprehensive reports useful for tax preparation, ensuring that all deductible expenses are accounted for and claimed.
- Cost Savings: By minimizing the need for paper, businesses save on printing and storage costs. More importantly, reducing bookkeeping errors reduces the costs that result from inaccurate accounting data.
- Identifying Spending Trends: Helps identify areas where the business may be overspending or where costs can be cut.
- Data Protection: Advanced security measures protect sensitive financial data from unauthorized access and data breaches.
Implementing receipt tracking software can lead to significant operational improvements for small businesses in Canada, enhancing their ability to manage finances accurately and efficiently.
Let Us Help!
Want to take photos of receipts and then forget about them? Our reliable bookkeeping services provide you with an experienced bookkeeper who takes care of your day-to-day bookkeeping tasks. Contact us today to learn more about our services and fixed monthly fees, available in Vancouver, Calgary, Edmonton and Toronto.
How We Select and Evaluate Our Recommended Software
We thoroughly research and test the apps we include in our regular workflow for Client bookkeeping services. After deciding on criteria for evaluating the software and then researching the app itself, we tested the app, noting its strengths and weaknesses. We then work with the app for at least a few weeks before deciding whether to recommend it to our readers. We use the software as it was designed for its intended tasks. For a detailed walk-through of how we select and evaluate software, please see the details of our process.
