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Tips for Organising Invoices and Receipts for Small Businesses

Ask any entrepreneur what their least favorite business activity is and just about all of them will say “paperwork”. At the same time, everyone has to take care of it if they want their businesses to be up and running. However, finding out how to organize invoices and receipts doesn’t have to feel like an ordeal. If you need some tips on how to make this part of your life easier, check out this article.

What Are Invoices and Receipts in Accounting?

First of all, let’s make it clear what documents we’re talking about here.

An invoice is a request for payment. Once a product or service was delivered to a customer, you send them over an invoice, thus asking them to pay for it. This document doesn’t have a standard template, but usually, it contains details that tell you as much about a transaction as possible. Such details usually the date and time of the transaction, invoice number, date of issue, date of due payment, what goods/services are delivered, their price and quantity, vendor and customer names and tax codes, etc.

A receipt is a document issued after goods/services were paid for and prove that said payment was made. Also, a receipt is proof of ownership that can be used to return or exchange something. Similar to invoices, receipts do not have a uniform standard but contain as many details of a transaction as possible. Usually, they mention vendor and customer names, mode and date of payment, price, taxes, discounts, total amount payable and a reference number.

Why Should You Keep All Your Invoices and Receipts?

While sorting out tens and hundreds of invoices and receipts may be one of the most boring things in the world, we can’t stress enough just how helpful these documents are.

Invoices and receipts are a source of financial documents. If you keep a record of every single transaction, you know how much your business makes and how well it’s doing. Besides, having all documents in order simplifies accounting and auditing, which takes a huge weight off your shoulders when it’s time for filing your annual reports.

Additionally, invoices and receipts can serve as legal documents. They prove that you actually delivered a product or service and that a customer actually paid (or didn’t) for them. Should arguments arise, these papers can provide legal protection for you and your team.

How Can You Organize Your Invoices and Receipts?

Regardless of how you prefer to organize your paperwork for your business, there are some universal tips that will make this process easier for you.

  1. Start with designing and implementing uniform document-keeping standards for yourself and your team. If you all stick to them, it will help keep any chaos at bay.
  2. Put as many details on your invoices and receipts as possible. This includes date and time, customer ID, product/service name, transaction amount, taxes and discounts, invoice/receipt reference number etc. Your accountants will appreciate it.
  3. Match your invoices and receipts in chronological order. This way, you’ll automatically be updated on your income.
  4. Don’t procrastinate. Yes, it’s hard, but processing a year’s worth of papers in one day when you discover your reporting deadline is tomorrow is way harder.
  5. If somebody else takes care of your accounting, don’t make their work more complicated than it has to be. Store everything neatly.

Physical Method of Organization

Do you deliver products or services to clients that communicate only with paper invoices and receipts? Then this method may be the one for you! Since it only requires enough storage space and supplies at your disposal, it can be used right from the launch of your business.

  1. Always print out two copies of invoices — one for your clients and one for your own reference.
  2. Separate receivables from payables. Match invoices with receipts to know what products/services have been paid for and where payment is still due.
  3. Put down this information in your accounting journal as soon as you can. Don’t rely on your memory to do it someday later.
  4. Then, categorize the invoice-receipt pairs. Design a document processing path depending on the specifics of your business and what things you want to monitor.

Think of your KPIs. What is important for you to know? What can invoices and receipts tell you about your performance? For example, if you deliver more than one service or product and want to know which is more successful and can be scaled up, you can sort them by product and put each in its designated box or folder. Then, sort them by month and so on.

  1. Store unprocessed or unmatched invoices and receipts somewhere you won’t miss them.
  1. Please consider making digital copies of your invoices and receipts. Paper documents are more fragile than people think: ink fades with time, and a move or office flood might destroy your entire archive.

Digital Method of Organization

If your customers are fine with electronic invoicing and payments, this method will suit you perfectly. You won’t need to spend money on a big office or printing supplies; however, you’ll have to stay focused.

  1. First of all, choose invoicing, accounting, or project tracking software that both you and your team will be comfortable with. There are many free options that suit small businesses — such as Google Sheets, Trello, or Notion.
  2. Create file naming standards for yourself and your team. You should be able to know what’s in a file and where it belongs at a glance.
  3. Next, design a document processing path. You’ll need to separate processed invoices and receipts from unprocessed, and then categorize the processed ones. Again, think of your KPIs and what these documents can tell you.

Do you want to know what product or service of yours sells better? Is it important which of your offline stores makes more money? Do you need to know how profitable each of your clients or regions of operation is? Make a folder depending on what’s relevant to your business model.

  1. Make a digital accounting journal. Transfer data from invoices and receipts into it as fast as possible: files may get lost in the depths of your hard drive.
  1. Spice it up with some colorful tags and navigation (also, it makes paperwork more eye-friendly).
  1. If you’re working in a team, consider using cloud storage for sharing with your staff and auditors. It’ll let you access your files from anywhere and serve as an additional safekeeping measure.

Finding a Middle Ground with An Invoice Scanner

Sometimes, you cannot stick to one method of organization. Some clients may be

old-fashioned and accept only paper invoices, while others might be digital nomads and communicate with electronic receipts. Instead of maintaining both a full-blown office archive and cloud storage, you can combine these two approaches and minimize the number of printouts. Today, you can use your phone camera to scan documents. There’s no need to invest in a specific scanner: you can find plenty of apps that will quickly digitize your printouts. Just download them, scan your documents, upload the files to appropriate folders, and put the relevant data into your digital accounting journal.

Upgrade to the Storing on the Cloud as Your Company Grows

While you can manage your finances single-handedly at the very start of your business, the processes at your company are likely to get more complex as you scale up.

Instead of updating a spreadsheet and a few folders once a week, upgrade to using cloud accounting software so that you can truly get rid of the paperwork and access your documents anywhere and any time. With cloud storage, you can then invest in more professional bookkeeping and accounting services to advise you on the best way to administer your company financially. This is when it’s best to use cloud accounting softwares so that you can keep documents more

At the end of the day, bookkeeping shouldn’t monopolize your time and energy or take them away from the other spheres of your business. Thus, it’s important to monitor such things to know when you should consider outsourcing some of your tasks.

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