Did you hear the joke about the accountant who didn’t want clients to save their receipts? No? That’s because there is no such person!
Why are receipts so important? They are PROOF. Receipts are documented evidence of what the money was spent on. (Also known as “trust but verify”.) This is the foundation of transparency and accountability. It is also the first line of defense against fraud.
Receipts don’t have to be on paper anymore – they can be emailed, or even a confirmation webpage saved as a PDF file.
Receipts should contain the following info:
* Vendor name, ideally including location (for expense reports for business trips)
* Date of purchase / time of transaction
* Itemized list of purchases and the price per each
* Any additional costs, such as tax or shipping, and the total price.
* If being shipped, the address sent to
* Method of payment (cash, credit card, on account – to be invoiced, etc)
So, what do you do with the receipt once you have it? It should be given to the person who processes the bills the company pays. It is their job to match the receipts with the bills (also called invoices, or “Accounts Payable”). This provides proof that the money is spent on legitimate business purchases.
An expense report is a cover sheet for all the receipts collected on a business trip. This makes the payment processing person’s job a lot easier.
A cautionary tale – the Staples swindle
If the office manager says he spent $250 using the office credit card buying things at Staples this month, what back up is needed? The charges to Staples are right on the company credit card statement. That is proof enough, right? Also, some stuff arrived in boxes from Staples.
But how do you know what the $250 was spent on? Was everything accounted for? Did Staples make a mistake – charging $250 and then one item never arrived?
Using receipts and their cousin, the packing list, a paper trail is created that details what was bought and what actually arrived in the office. These documents must be given to the person who processes the bill payments.
The original receipt for the order – listing everything ordered and the cost – is emailed to the person placing the order. This receipt listing all the items ordered is *proof* that the $250 was actually for items used in the office and shipped to the office address. Without the receipt, there is no proof that the office manager did not in fact spend $100 of that money on ink cartridges for his own personal printer, shipped straight to his home address.
A second type of form, called a “packing slip”, should also be saved. This is the form that comes with the delivery box that everyone throws away and never looks at. It lists everything in the box and is supposed to be given to the person who processes the bills. They match up the items listed on the packing list to the original invoice for $250. This double-check ensures that Staples did not forget to send something, especially if they arrive in different boxes over multiple days.