A guide to smart receipts management

One of the most challenging financial tasks for many people is effectively managing receipts. The volume of receipts collected during the course of an ordinary week — and multiplied by 52 — could mean hundreds of pieces of important expense info scattered about the house each year.

The clutter alone may be bothersome. But more important, the lack of smart receipt management may have negative impacts on financial health and controlled spending.

Enter digital scanning and storing methods, which can transform receipt filing – helping to monitor and keep track of receipts in real time as well as aid in budgeting and financial planning.

This guide for beginners offers smart receipt management practices to help streamline expense tracking and boost financial management.

What are smart receipts?

Smart receipts are digital versions of paper receipts. Often called e-receipts or electronic receipts, these come in the form of electronic records sent to someone from a retailer via email or text, or accessed through an online app or online portal.¹

If a retailer only provides a paper receipt, the receipt can be scanned via app or scanner at home and put in a digitized form. Then, just like that, it's a smart receipt.

Smart receipts also have distinct potential advantages:

• Access and search capabilities. Digitized receipts allow for options like advanced search and filtering, making it easy to pull up specific receipts and transactions fast.

• Environmental sustainability. Smart receipts are an alternative to paper receipts. By eliminating the need for paper, there could be less deforestation, less environmental waste, and more conservation of natural resources.

• Archiving and protection. Paper receipts and financial documents can get lost, damaged, or fade after a certain amount of time. Digitization preserves the original expense record.

• Personalized offers. Digital receipts often include special discounts based on purchase history or loyalty program information from the retailer.

• Shopping app discounts. Cash back apps based on receipt scanning work together with the shopping experience. Scan physical receipts or upload digital ones onto the app and earn money or gift cards on certain items purchased. Availability of this benefit may vary from app to app.

What are the types of smart receipts?

There are various types of receipts that can come in different digital formats, including:

• Email. After a purchase — either online or in-person — the retailer sends the receipt to an email address on file.
• SMS. Instead of a physical receipt, the retailer sends a digital version to a smartphone by text message after a transaction.
• Scanned receipts. Hard-copy receipts are scanned via scanner or smartphone and stored securely on a computer or cloud.
• Access via app or online. A digital receipt is generated after a transaction and sent to a dedicated app or online platform.

How smart receipts work

While availability and steps may vary depending on the purchase, retailer/seller, payment method, and potential use of an accompanying app, here’s how smart receipts generally work:

• After a transaction, customers receive an electronic record of their purchase. This can be in the form of an email, text, or stored on a platform. To keep digital receipt emails separate from regular emails, one could look into using an email-forwarding service.
• Physical receipts (new or existing) can be manually scanned to become digitized. This can be done by taking a picture with a smartphone or using a scanner.
• Next, the receipts can be stored together and categorized on a device, app, or cloud-based system and quickly accessed for review, returns, warranties, or expense tracking.
• Smart receipts can be part of a budget management system, so all purchases are in the same place for record-keeping and expense planning.

Digitizing receipts: Techniques and tools

To start digitizing paper receipts, choose a scanning device. This can be a small scanner (some are even dedicated to receipts) that physical receipts can be run through.

There are also scanning apps that can be downloaded to a smartphone. In this way, scanning an image of a receipt can be done at the point of purchase.

Create a routine for collecting, sorting, and digitally filing receipts and stick to it to avoid having paper pile up. This could be done weekly or monthly. If needed, write notes on the receipt before scanning it to clarify the purchase and its purpose.

Don't forget about quality. Details on printed receipts can be tiny or blurry so check that the scanner settings are optimal and adjust resolution, if necessary. Scanners made specifically for receipts may offer the best quality.

Be sure to keep all physical receipts until the scans are successfully stored in a digital system.

Setting up a smart receipts system

In thinking about an effective digital system, organizing receipts around "type" can help with expense tracking. By sorting receipts into distinct categories, spending patterns can become clearer and weaknesses identified. This deeper look into spending can show where costs could be cut or funds redirected, as well as provide insights into longer-term personal finance trends.

A digital receipt filing system should align to personal or business needs. Here are some tips for organizing digital folders:

• Create descriptive file names. Using detailed file names can help documents be easily searched and accessed. Include the date an item was purchased, name of the retailer, and reason for the purchase.
• Categorize and tag. Grouping receipts together that are similar can make for easier sourcing and retrieval (for example, groceries, travel, gifts, and office supplies). Many scanning apps and cloud-storage platforms have the capability to do file tagging with these types of labels.
• Determine folder structure. If folders are organized by year and category, new receipts can be added quickly and older ones archived successfully for easy retrieval at a later date.

Once a system for expense tracking is created, consistency is key. Try not to change the organization, which could lead to misplaced receipts and invoices. Keep the same categories, labeling, and storage methods over the long haul to aid in tracking expenses over time.

Potential benefits of smart receipts management

Smart receipts simplify record-keeping and expense analysis by automatically storing transactions in a digital format. Whether the need is for expense monitoring, tax preparation, or budgeting, the automation that digital tools and apps provide can potentially be a big benefit in gaining control over one's' spending.

Here are some possible advantages to adopting smart receipt management practices:

• Reduce paper clutter. Digital receipts reduce the hassle of managing paper receipts, creating a centralized location for keeping transactions.

• Convenience. Digital receipts can be quickly and easily retrieved for returns, warranties, package tracking, or for accounting purposes.

• Faster expense reconciliation. Whether tracking immediate purchases or payments being made over time, digital receipts can automatically flow into an expense management app and be worked seamlessly in to a budget.

• Improved accuracy. Scanning original receipts or receiving digital transaction information from a vendor prevents mishandling of physical receipts and reduces errors if receipts are damaged or missing information.

• Tax preparation. Having receipts digitally organized come tax time may help lower the chance of tax-filing errors. In the case of a tax audit, properly documented and digitized expenses may help justify expenses, claim proper deductions, and meet necessary tax codes.

Security and privacy considerations

When choosing a digital receipt management platform, consider the security and protection it offers. In order to protect sensitive information and keep data private, electronic storage should have encryption and backup options. Look for reputable companies that offer these services and are compliant with data protection regulations.

Additionally, it is wise to encrypt data. When smart receipts contain sensitive data or credit card information, make sure the storage format utilizes encryption methods to help safeguard the personal data and protect against fraud.

Separately, it’s important to keep data from being lost. Make sure smart receipts and financial documents can be accessed from different devices. Using the cloud offers access from a computer, tablet, or smartphone. This way access can be enabled anywhere there's an internet connection. And remember to back up data. A cloud storage service may be able to automatically back up receipts and transaction information. An external hard drive also works but will need to be updated manually.

How PayPal can aid receipt handling

Digital wallets can be a one-stop shop for accounting and record-keeping — like managing digital receipts, tracking packages and returns, inputting spending, and getting cash back offers or personalized recommendations related to past purchases. PayPal’s digital wallet is one example of an all-around expense tracker that can manage digital transactions from almost anywhere.

Learn about shopping with PayPal.