Whilst the management of receipts may feel like merely a mundane task; it’s a critical component of maintaining accurate financial records and a cornerstone of sound financial management.
The stark reality is that dealing with missing receipts can transform into a daunting nightmare for finance teams and employees alike, causing a significant amount of stress and disruption.
The lost receipt
Let's visualise a typical scenario where an employee, perhaps in a rush or amidst the chaos of a business trip, loses a receipt for a business-related expense.
The lost receipt may have been for a necessary expenditure, such as a meal during a client meeting or parking at a conference. The employee, now faced with the prospect of filling out an expense report without the receipt, will need to dig through their personal records, retrace their steps, or even going to the extent of contacting the vendor for a replacement receipt.
Whilst many receipts are now digital e.g. Uber, there are still plenty of paper receipts for business expenses that when lost, can transform into a time-consuming, frustrating, and often fruitless process.
Challenges for the finance team
Conversely, the finance team finds themselves in a precarious and unenviable position. They are entrusted with the responsibility to account for all expenses accurately to maintain compliance with financial regulations and to avoid potential audits that could unearth discrepancies.
Even a single absent receipt leaves them in a quandary as they may not have all the necessary detailed information needed for accurate accounting.
This can inadvertently lead to inaccuracies in financial reporting, which can have serious and far-reaching consequences for the company, including reputation damage, tax compliance issues and potential legal repercussions. Yikes!
The cost of MIA receipts
In 2023, the AAT upheld an earlier Australian Taxation Office (ATO) ruling that William Smith, an energy infrastructure expert, could not claim work-related expenses totalling $48,425.86 as part of his 2019-2020 income tax return.
Why? Because he didn’t have receipts to support his expense claims.
The Administrative Appeals Tribunal (AAT) upheld the ATO's decision, emphasising the critical nature of accurate and detailed record-keeping for tax purposes. The AAT noted that while the individual had made efforts to reconstruct some records, these efforts were not sufficient to verify the legitimacy of the expenses claimed.
The Commissioner of Taxation “put to me that the bank and credit card statements are not documents from the supplier of the goods and services, and do not otherwise satisfy the requirements” of a valid business expense, wrote Tribunal Member Lee Benjamin in his decision.
Source
This case serves as a reminder to individuals to maintain proper records, including receipts, invoices, and other documentation, to support their tax claims and avoid potential disputes with tax authorities.
Dealing with missing receipts can be an arduous, challenging task for both finance teams and employees alike. It not only impacts the accuracy of financial records but can also lead to negative repercussions such as legal issues.
How to make receipt tracking easy
Put simply, using an app like Budgetly will make tracking receipts faster, simpler and more robust!
Budgetly offers an efficient solution for tracking your business expense receipts, making the process easy and fast for everyone involved.
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Physical & virtual cards: Instantly issue cards to your employees with pre-approved budget and spending rules encoded. Everything is tracked to the app automatically for complete visibility and control.
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Mobile app: The Budgetly app allows employees to capture receipts on-the-go. Simply snap a photo of the receipt, upload it to the transaction and voila! The app even sends a notification when a new transaction is made so no one will forget to track their receipts.
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Automatic GST extraction: Save a minimum of 4 hours for every 250 transactions with GST amounts automatically extracted from receipts – no more manual entry or calculations, saving the finance team time and effort.
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Digital storage: Receipts are stored digitally in the app, eliminating the need for physical copies. Access receipts whenever you need, without the risk of losing paper receipts.
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Integration with accounting software: Budgetly integrates seamlessly with Xero, automatically synchronising your employees cards payments to Xero, with receipts attached and tracking categories.
Not using Xero? Our system is compatible with all accounting software. You can download the CSV file and upload it to any businesses accounting software of your choice.
So now you can see why it's of paramount importance to implement effective, efficient, and fool-proof receipt management strategies to avoid potential compliance issues and costly legal proceedings.
Implementing Budgetly in your business will ensure financial integrity, save time and ultimately contribute to your company's success and longevity. It’s the better way to control budgets, manage spending and track receipts.
If you’d like to eliminate receipt tracking dramas with instant budget allocation, automatic GST extraction and real-time reporting, then schedule a demo with us today, or watch a 10-minute recorded demo.