Small businesses routinely face delayed payments from suppliers.
According to an analysis conducted by Xero, a business software platform, late payments cost small business owners £684 million annually, with invoices being settled, on average, 5.8 days past the due date. Late payments negatively impact small businesses' cash flow and working capital requirements.
Companies can ensure timely payment for their services and products by organising their business receipts and invoices efficiently. Invoices and receipts are essential documents for businesses as they provide a clear record of purchases and sales of goods and services. In short, they are invaluable documents, particularly when dealing with tax-related matters.
This article at a glance
Efficiently organising invoices and receipts is crucial to ensure timely payment and maintain accurate records. Proper documentation facilitates financial management, proof for accounting and tax purposes, and strengthens business relationships. Businesses can organise invoices and receipts either physically or digitally. The key takeaways of this article are: file your invoices and receipts immediately upon receipt and create backup digital copies of your financial documents.
What is an Invoice? Invoices and receipts help businesses keep track of their transactions with customers. Invoices are used to request payment, and receipts are used to show proof of payment — they work together to allow for complete and accurate record-keeping.
For every small business owner, maintaining proper records of digital and/or paper invoices and receipts facilitate:
For a limited company in the United Kingdom, it is best that you keep up all your invoices and receipts for at least 6 years as part of your accounting records, as required by the HM Revenue and Customs (HMRC). Having an effective record-keeping system allows you to make better decisions, ensure your business’s compliance and strengthen your overall operations.
Whether it’s organising paper receipts or digital receipts, there are some simple steps that you can follow:
Maintain order, easily locate business receipts, and safeguard crucial financial records for your business by implementing these steps in your business. Your stress levels will wane away when tax season comes a-knocking.
Let’s look into the physical and digital methods of organising invoices and receipts in more detail.
Your company may have adopted a digital-only record-keeping system, but one of your clients solely communicates via mail, and this customer still issues a paper invoice or paper receipt. What then? Make sure you have sufficient storage space for (actual) folders and the necessary supplies (back to the bookshop!). Here are more tips for you:
Digitisation simplifies and streamlines business, and organising invoices and storing electronic receipts is no exception. To store your receipts electronically, you have the option of using specialised software or simply storing scanned receipts on your computer.
It is crucial to ensure that you back up (using external hard drives or cloud servers) your digital receipts to avoid the risk of losing important financial information.
Utilising accounting or receipt management software enables you to upload, record, and track your invoices and receipts efficiently. Software systems offer features like setting reminders to prompt you to upload and organise receipts.
Forbes recently listed their selection for the “Best Receipt Scanner Apps (2023)”. Who made the list?
These apps let you scan and store receipts and invoices on your phone — an absolute breeze.
While adopting most of these digital systems may add costs for you in the short term, they allow you to embrace a paperless approach to financial documents, which consumes little or no space and simplifies long-term retrieval.
Dealing with extensive paperwork can be overwhelming and burdensome. We hope that we have some shed light on how to organise your invoices and receipts with the practical approaches listed above.
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