In launching Enkel, I have learned a great deal about cloud-based technology that is revolutionizing the way that 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 a tool called Expensify as one of my earlier clients uses this receipt tracking software extensively. It was not until I started using receipt tracking software myself 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.
Then, within five minutes of installing ReceiptBank 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 of the benefits of using Receipt Bank is that it uses Optical Character Recognition (“OCR”) to read your receipts limiting the amount of data that 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. In addition, Receipt Bank has more robust features to allow you to assign roles and to control the types of expenses that can be added by employees.
I have been surprised at how accurate the OCR is with this tool. 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 into 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, a journal entry is created with the corresponding amounts being recorded as expenses in the accounting system.
Though cloud-based accounting system apps are better than their paper-based counterparts, I did recently run into a bit of a 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 there was one member of the senior management team who reviewed everyone’s expense report with the exception of another senior manager. Both senior managers should have been able to have their expenses approved only by the CEO. The problem is that by granting one of the senior manager's approval privileges, he is now able to approve his own expenses as well as those of the other senior manager.
If you are a small-to-midsize business with a fairly flat structure, this tool may suffice. Also, it comes at no additional cost whereas tools like Receipt Bank can be quite costly at $25 USD per month for 50 transactions.
Then again wouldn’t you rather spend time doing something other than dealing with your receipts this weekend?
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