For some people, an expenses receipt is only a piece of paper that gets crumpled up in your pocket. Especially in the business world, it is a proof of purchase that can save companies but also freelancers and employees lots of money. We have compiled a comprehensive guide with all the information surrounding expenses receipts and why it can be extremely important to keep track of your daily expenses.
What is an expenses receipt?
An expenses receipt is a proof of purchase that customers and clients receive when paying for a product or service. It is different from an invoice, as it not only contains information on the company that provides a service or product for sale and its price. It also includes details on the completed payment. So, this piece of paper that nowadays can also come as an e-mail or another digital evidence shows how much was paid and if the recipient paid cash or by card. This statement is also needed to comply with national tax regulations.
Good to know: Self-employed people such as freelancers must keep receipts for five years, limited companies are obliged to store them for six years. During that time, it is possible that they are required to undergo an audit from the HMRC (Her Majesty’s Revenue and Customs). The national tax office can check all books to rule out discrepancies and fraud. For that check, companies have to provide all documentation. If something is missing or seems irrelevant or false, it could possibly lead to additional tax payments, fines or prosecution for severe cases of fraud.
Which information does an expenses receipt contain?
The information provided on expenses receipts can vary depending on the paid product or service. However, it is safe to say that some information is crucial for meal expenses, gifts, travel costs, accommodation, and other typical business expenses.
When collecting expenses receipts is required, these are details that always should be included to make it a valid proof of purchase:
- date and time of purchase
- company name and address
- a detailed description of the product or service
- the amount
- VAT information
In some cases, a tax number is stated as well. Companies can also ask for the employee’s name to be added to the proof of purchase. For payments with business cards, additional card information can be useful to prove that the card has been used for that matter.
What to do when an expenses receipt got lost
It can happen to the best of us: When travelling or during busy times, an expenses receipt can get lost. It accidentally slips out of your bag or pocket, gets thrown away with rubbish or the wind blows it onto the train tracks or out of the window. Because many receipts are printed on thermopaper, they can even get destroyed pretty easily by leaving them in a hot car or getting in contact with chemicals. Eventually, those who have not ripped up a receipt by accident, please raise your hand!
So many people ask themselves: Can I claim expenses without a receipt? If it is not possible to find the original proof of purchase, or you never received one in the first place, there still is a chance to claim expenses.
Purchases under £25
Second-hand purchases or spontaneous transactions at food locations usually do not come with a receipt. However, it can be useful to keep track of those expenses. For purchases under £25, it is possible to claim VAT without a receipt.
Road tolls or car parking sometimes get paid without being handed proof of payment, so writing down those expenses whenever they occur can save money with the upcoming tax return.
Purchases over £25
Unfortunately, claiming VAT is not possible when purchases cost more than £25, but it is still possible to show proof of payment via a bank statement when a card was used to pay for the expense. This can be useful for employees who have paid for business purchases and wish to be reimbursed.
In the end, it is up to accounting and management if they can accept the bank statement without being handed a proper receipt. Using a business card to pay for the purchase definitely helps here, especially when the purchase can be backed up with further internal information.
Can I claim business expenses without a receipt?
When searching the internet for answers, it is very likely to find websites that offer expenses receipt generators. Those tools let users write their own receipts by adding a company’s information, the paid amount, tax information and more. However, this service can be a risky endeavour when used carelessly. Depending on how the creation process is conducted, one might even call it fraud—this is the case when users claim fictitious amounts for purchases that have never been made. Of course, this is not the case when receipts get lost or damaged, but it might still become a problem for accounting when there is no original receipt to work with.
Tip: To be on the safe side, it is best to consult the company’s accounting team or talk to a tax advisor before going forward with writing your own expenses receipts. This also applies to lost or destroyed receipts, especially when it would mean that business expenses without a receipt might cause problems in bookkeeping.
How automated processes help with expense management
There is a common rule in accounting: The simpler it is for employees to submit their receipts, the better. This is because expense claims can be a time-consuming task for them. Most colleagues are packed with work and lean towards more interesting tasks than inserting receipt data into spreadsheets—how could you blame them?
That is why OCR scanning can fix a common issue. Employees simply take a picture of their expenses receipt with their mobile phone and let an app do the work for them. These are the main benefits for staff and accounting:
- avoids errors caused by manual data entry
- saves plenty of time for more important tasks
- losing a physical expenses receipt is not a problem anymore as there is a digital copy
- employees tend to claim more expenses in time and not forget about it
- workers can get promptly reimbursed for out-of-pocket expenses
- better company experience for employees
- real-time overview of expenses costs and better analysing possibilities for managers and accounting
OCR scanning can go hand in hand with other digitisation processes and even speed up the approval of reimbursement for employees. With the help of a clever interface, the collected data can also be used with smart accounting software such as Xero.
Organising expenses receipts with Moss
We have good news: Keeping receipts in boxes and folders is a thing of the past. Nowadays, every business should switch to digital solutions. This helps avoid typical problems that sooner or later occur when handling old-fashioned paper receipts. With Moss, every proof of purchase can be digitised within seconds by employees. Whether they are on a business trip, buying supplies for the company or having lunch with a client. They can add their expenses receipts by simply scanning them with their mobile phone. Time-consuming expense reports? There is no more hassle at the end of the month when colleagues can submit expenses directly just after purchases were made. Out-of-pocket payments get reimbursed quicker, too, as managers can approve payment with just a few clicks.
But wait, there is more: Moss also offers an unlimited amount of corporate cards for businesses, so that every employee can use their own physical or virtual card. Management can easily set limits or restrict use to a specific purchase. This way, even freelancers can pay for subscriptions with a company card.
The benefit of all this: Avoiding out-of-pocket expenses and dealing with expenses receipts from employees. Instead, every payment and purchase show up neatly and transparently in your system. This is useful for checking funds in real-time, keeping an overview of department expenses and gaining further insights into the company’s financial status.
Which businesses can benefit from Moss?
Especially medium-sized companies can work more efficiently when digitising their processes with Moss. On top of that, tight budgets can profit, too. Automated processes can free accountants and coworkers from tedious tasks so that there is more time for evaluation, improvement, creative thinking and much more. Reducing pressure in the workplace always pays off eventually. Companies can see a spike in motivation and team spirit, which also has a positive effect on overall health and work availability.
Tip: We also highly recommend checking out our invoice management solutions and insights tools. The modular approach supports start-ups and established businesses from tech, consulting, e-commerce and plenty of other business types.
FAQs
A VAT receipt for expenses is proof of purchase. Customers and clients can prove that they have paid for a specific product or service. It also includes information on the VAT that has been paid so it can be considered in the upcoming tax return.
The piece of paper you receive in a supermarket, a drug store or at the petrol station is an expenses receipt. Individuals who receive them for personal purchases do not always need them, but businesses heavily rely on them as proof of purchase.
A valid expenses receipt should contain the date and time of the purchase, the business the purchase was made at and specific details on the product or service. Moreover, the paid amount has to be stated. The receipt can be on paper or come as a digital receipt.
It is always best to consult the company’s accountant or a tax advisor when an expenses receipt is missing or got destroyed. For purchases under £25, a receipt is not necessary, so there is some leverage for businesses and self-employed individuals.
Office expenses under £25 usually do not require a receipt. This is a helpful exception as many smaller purchases do not even come with a printed or digital receipt. If the issue is more complex, we recommend checking with accounting or a tax advisor.
If an employee and the company they are working for have agreed on necessary purchases or services and expenses made out of pocket, these should be reimbursed after submitting an expense report. To avoid disagreement and payment delays, it is always best to use a company card for obvious business expenses.
