Taking the pain from processing receipts – have we reached the promised land?

There are a variety of apps that claim to lead you a utopian world of painless, paperless receipts processing. But which solution is right for your business and do they really deliver on their promises?

Probably the best known application is Receipt Bank. (https://www.elverconsultancy.co.uk/receipt-bank/) Receipt bank uses a combination of OCR and templating technology and humans to convert a paper or e-invoice to data which you can then publish (or even auto publish) to your accounting system. It integrates with Xero and Freeagent and all the other leading cloud based accounting applications. When you first start to use Receipt Bank you may find the time saving is limited, but as the software starts to learn and you start to teach it, receipts processing can become a breeze. Invoices or receipts can be published as bills or to expense claims in Xero, so when the payment is made, the bank reconciliation process in Xero will match the two and you have to do no more than click the OK button. For regular purchases from the same supplier you will soon find yourself in a position where Receipt Bank knows how to code it, what the VAT rate is, it is auto published and your only task is to click OK on the bank reconciliation. Charges depends upon how many transactions you process and range from £20 + VAT per month for 50 transactions to £190 + VAT for 675 items. Plans above that level are not published. However, forward thinking accountants like Elver Consultancy include unlimited processing within their service packages. You can use the Receipt Bank mobile phone app to take pictures of receipts on the go, and for invoices you might either receive by email or download from a supplier website, you can forward these to your own dedicated Receipt Bank e mail address.

AutoEntry is very similar, but with a different pricing structure. You buy credits starting at £9 + VAT per month for 50 credits to £75 + VAT for 500 credits. A receipt is 1 credit, but 2 credits if you need to extract line item detail.

Cloud based accounting applications like Xero and Freeagent have their own mobile phone apps that allow you to take photos of invoices and receipts. So if you use Xero or Freeagent, why would you need Receipt Bank? These apps don’t use the OCR technology that Receipt bank uses. When you take a photo of a receipt you would also input data into the app like the amount, date, who the supplier was and what account the transaction should be posted to. And for invoices received by e mail or downloaded you can send these to a dedicated e mail address for the image to appear in the software for you to process. There is therefore more work involved in using these apps.

At Elver Consultancy we have our own free app (https://www.elverconsultancy.co.uk/elver-app/) which, amongst other things, also provides you with the option to photo receipts and forward on to us for processing if we are doing your bookkeeping, also keeping your work down to a minimum.

A fairly new entrant onto the market is Pleo, (https://www.pleo.io/en/) a payment card solution that automates expense reports and simplifies company spending. This does go one step further, in that not only will it do exactly what Receipt Bank or AutoEntry does for receipts on the go, but because the receipt processing app is connected to the payment card, the apps knows when a purchase has been made and therefore sends push notifications to the user to prompt them to take a photo. And it already knows the supplier and amount, so the only missing information is the account code for the purchase and VAT. You also get a virtual card for online purchases. It integrates with Xero and Freeagent and other online accounting applications.

In Pleo, much like Receipt Bank, you can set defaults for your suppliers in terms of the account code to use and the appropriate VAT treatment. But you will still need to review this and amend as appropriate, as there are always likely to be purchases made, especially when travel expenses are being incurred, For example it’s not inconceivable that someone would buy a sandwich (zero rated VAT) and stationery (standard rated VAT) at the same time and this will need manual intervention.

Pleo is not however a debit or credit card, it is a prepaid card with a minimum deposit of £500. Unlike most other prepaid cards the deposit is held centrally for all card users to draw on. Charges are £7 + VAT per month for each active user, but with a minimum charge of £30 + VAT. This can therefore be a more expensive option, and what you are getting in addition to what Receipt Bank or AutoEntry offer is the push notifications to remind employees to take their photos of their receipts.  However, missing VAT receipts cost businesses money, so if the additional notifications and monitoring that is available in the Pleo management application mean that more VAT is reclaimed as a consequence of using Pleo then it could potentially pay for itself and the additional VAT reclaimed may even be greater than the cost of running the cards. 

So have we reached the promised land? No. The ultimate goal must be for the payment service provider to also capture the receipt and VAT data, ensuring that VAT treatment is 100% accurate. There wouldn’t even be a need to photo the receipt if an e-receipt was passed electronically from the retailer epos system. This needs a far greater degree of integration between the retailer payment processor and the buyer’s card solution, and probably HMRC approval. Given HMRC’s drive towards Making tax Digital, which they believe will close the “tax gap”, you would think they would be enthusiastic about such a development – even if that means that VAT is reclaimed that can’t currently be reclaimed for lack of a VAT receipt. That still then leaves the categorisation of the expense as a potential area for error. There are cards now that provide you with summary reports by category of expenditure, but they are far from accurate, and realistically how could they be, since they rely on knowing what a particular vendor supplies. That work sometimes, but how many different types of products can you buy on Amazon for instance? But perhaps with the development of Artificial Intelligence even this hurdle could be overcome.