Over the years, as an accountant, I have received invoices in many different forms;
- invoices stashed in envelops marked by month, with a schedule listing all the payees, the date of payment and the amount for each transaction all neatly typed out by the business owner/employee, printed and attached to each envelop presented in a meticulously compiled file,
- a stash in a box that was located next to the till in a bar with various questionable stains on them, with the owner’s assumption being that they all fell in the year for which we were to prepare the annual financial statements,
- on another occasion, it was a tale of a hi-jacking, in which the criminals not only got away with the car but the suitcase which had been used to store all the invoices over a period of months,
- in plastic sleeves, which, no matter how many times we tried to sort through we found a significant number still missing, which sent the owner in search for the other invoices, let’s give that an average turn-around time of 2 weeks each time.
Some clients we found to be more organised than others which reflected how much they valued and respected their business. They invested significant amounts of time safely retaining these slips, documenting the detail in a spreadsheet and sorting them per month. Others simply dumped them in a box figuring that maybe, one day, someday, they may be required and hoped for the best.
Let me take a moment here to explain the importance to the business owner of keeping the invoices and the receipts. Invoices and receipts are evidence of expenditure incurred by the business and most qualify as a tax deductible expense. They should be retained as proof of such expenditure occurring for both year-end company audits as well as audits carried out by the South African Revenue Services (SARS).
In the case of a statutory audit should the auditor (who usually tests on a sample basis) determine that missing invoices amount to a limitation of scope on the audit, he/she would be well justified to issue a disclaimer opinion on these financial statements meaning no reliance can be placed on the information reported. This would be detrimental for any business as no financial institution, shareholder or investor would give those financial statements a second glance.
During a SARS audit missing invoices would be interpreted as the company having been claiming tax deductible expenses for expenditure it did not incur. Not only is the company now guilty of submitting false returns but it now has to pay the taxes on the increased profit margin, the penalties and the interest. Depending on the duration of time past when these audits are performed, which could be years, the interest can be quite hefty.
Fortunately thanks to the wonders of the 4th industrial revolution there is now a solution to avoid the inconveniences and predicaments noted above. Receipt banking. This is an application which makes capturing an invoice as easy as taking a picture using a mobile phone. A picture of the receipt or invoice and the details are extracted by the application and saved on an online spreadsheet. The information is then cleared directly to the accounting software of choice reducing the risk of error. Furthermore, invoices can be e-mailed from the business owner or the supplier directly into the accounting software.
What does this mean for the business owner, the auditors, the accountants? No more stakes of faded, stained or missing invoices dating months and in some cases years back. No more time spent sorting invoices only to note for a third consecutive time some are still missing. No tales of bags of invoices, lost or stolen with no record of proof of them ever existing. No errors as a result of data incorrectly captured, human error. It’s a game changer, revolutionising how we do accounting, allowing for data to be available in real time. It is just one of the applications that we at Àrbol Grande Business Solutions make available to our valuable clients to make their lives, that much better.