Receipts are the paperwork nobody plans for. A supplier invoice arrives in an inbox and someone deals with it. A receipt arrives in a coat pocket, a car door, or the bottom of a bag, and stays there until someone asks for it. By the end of the month there’s a stack of them, half faded, and a bookkeeper trying to work out what a card payment of 38.40 at a petrol station three weeks ago was for.
None of this is hard. It just needs a short routine and a clear idea of what a receipt is for. This guide covers both.
A receipt is not a bill
The first thing to get straight is the difference between a receipt and a supplier invoice, because they go into your books differently.
A supplier invoice, or bill, is a request for payment. You owe the money, usually by a due date, and the bill sits in accounts payable until it’s paid. That’s why bills tend to go through approval: someone checks the work was done or the goods arrived before money leaves the account.
A receipt is proof that you’ve already paid. The money has gone, by card, cash or bank transfer, and the receipt records what it was for. There’s nothing to approve for payment, so a receipt is recorded as an expense, not as a bill waiting to be paid.
Mixing the two up causes real problems. A receipt entered as a bill can get paid a second time. A bill entered as an expense can make it look settled when it isn’t. If your team handles both, make sure whoever enters them, or whatever software reads them, knows which is which.
What to capture from every receipt
For each receipt, your books need a handful of details:
- Who you paid. The merchant name, written the same way each time, so your reports group spending properly.
- The date. The date on the receipt, not the date someone got round to entering it.
- The total, and the tax inside it. If your business is registered for VAT, GST or a similar tax, the tax portion often needs recording separately so it can be reclaimed where the rules allow.
- The currency. A receipt from a trip abroad should keep the currency it was paid in. Your accounting software converts it.
- How it was paid. Company card, business bank account, petty cash, or out of someone’s own pocket. That decides which account the money came from, and whether someone needs paying back.
- What it was for. The expense account it belongs in, such as travel, meals, office supplies or software.
Line items matter more than people think. A single supermarket receipt might include office milk, cleaning supplies and something personal that shouldn’t be in the books at all. Reading each line is the only way to split it properly.
Coding receipts to the right account
Coding means picking the expense account each receipt belongs in. It’s where most of the mess comes from, because two people will often put the same receipt in two different places.
A few habits help. Keep your list of expense accounts short and give each one a clear description. Agree defaults for the merchants you see every month, so fuel always goes to motor expenses and your software subscription always goes to software. Decide up front how you treat grey areas, like a client lunch or a phone bill that’s partly personal, and write it down.
We wrote a longer guide on this for supplier bills, and most of it applies to receipts too: invoice coding for small businesses.
How receipts usually land in accounting software
Most accounting systems have a specific place for money that’s already been spent. In Xero it’s commonly recorded as a spend money transaction or matched straight to the line in your bank feed. In QuickBooks it’s an expense. Other systems use their own names, but the idea is the same: a payment that’s already happened, recorded against the account it came from, with the receipt attached as evidence.
If the payment already shows up in your bank feed, the cleanest result is one transaction with the receipt matched to it, not a bank line and a separate expense for the same money. That leads to the most common receipt problem of all.
Stop the same receipt being entered twice
Duplicate receipts happen for dull reasons. Someone photographs a receipt and also forwards the email version. Two people from the same trip both submit the dinner bill. A receipt gets entered as an expense and then again when the bank line is reconciled.
The fixes are simple to describe. Have one place where every receipt goes in, rather than several inboxes and chat threads. Check each new receipt against what’s already come in from the same merchant for the same amount and date. And make sure only one tool or person posts receipts to your accounting software. We covered the same problem for supplier bills in our post on duplicate invoice payments, and the same checks work here.
Keep the originals, and know how long for
Tax authorities expect you to be able to back up the expenses you claim. Rules on how long to keep records, and whether a clear digital copy is enough, differ from country to country, so check with your accountant what applies to you. Whatever the rule, a photo taken the day you paid is far more useful than a faded slip found months later.
A routine that keeps receipts from piling up
The routine that works for most small businesses is short:
- Capture on the day. Whoever paid takes a photo straight away, or forwards the email receipt, to one agreed place.
- Review once a week. Someone glances over the week’s receipts, confirms the coding and sorts out anything unclear while people still remember.
- Post and reconcile. The confirmed receipts go into your books and get matched to the bank or card lines they belong to.
- Check at month end. Look for bank or card lines with no receipt, and chase those, rather than hunting through a stack of paper.
Where Clearline fits
Clearline does the capture and reading part of that routine. Your team sends a photo of a receipt, forwards an email receipt, or uploads a batch. Clearline reads the merchant, date, total, tax, currency and each line, suggests the expense account, flags anything it has seen before, and posts it as a business expense into the accounting software you already use. Supplier invoices go through the same place and post as bills, so receipts and bills never get confused.
You can see how it works on our receipt scanner page, or check pricing. A receipt counts as one document, the same as an invoice.