When submitting claims for business expenses, employees must typically include proof of purchase such as a receipt or invoice for their purchases.
During business trips, these have a tendency to go missing or get destroyed, becoming illegible or otherwise unusable.
Who hasn’t forgotten an invoice in their laptop case or put their hand in their jacket pocket only to retrieve a crumpled receipt from weeks (or months) ago? We sure have.
So what is the solution for these employees to avoid being out of pocket on business expenses?
When claiming expenses, employees can provide either an invoice or a receipt as proof of their purchase. Both are valid supporting documents for most tax authorities, but it is important to know what sets them apart.
An invoice is a commercial document issued by a supplier to the purchaser for the sale of goods or services. It usually lists the products/services, quantities and agreed prices for each as provided to the buyer. Payment terms are usually indicated. An invoice may also state whether payment has been made in full, partially, or not yet.
A receipt is a document issued to the purchaser stating that the supplier has received payment for goods or services. Receipts are intended as fiscal proof and must state the date of purchase.
To be accepted as proof of an expense, invoices and receipts must include the following information:
Organisations require supporting documents to reimburse their employees' expenses for various reasons:
If the supporting document is not available, employees may still claim the expense at the employer’s discretion. In most cases however, the employer will not be able to claim a tax deduction if the proof of purchase is missing.
To claim these expenses, employees will often need to explain the reason for the missing evidence and provide a signed statement justifying the expense and asserting that the amount is correct. This signed statement is known as an affidavit.
Unfortunately, most tax authorities require fiscal proof of purchase for tax claims meaning these affidavits cannot be used for VAT recovery.
The missing receipt and affidavit feature is part of our standard product offering. Once activated, it allows users to certify an expense and the amount despite a missing proof of purchase.
Activating this option introduces a checkbox at expense line level, allowing users to identify missing proof of purchase and provide an affidavit instead.
Checking the “Missing proof of purchase” box presents users with a field in which to identify the reason and a button to create the affidavit.
For easy controller access to these affidavits, they can open the PDF in a pop-up window during expense report control. Controllers can either print or delete the affidavit as needed.
Proof of purchase is important for travellers and controllers. It ensures both accurate, timely reimbursements and legal compliance.
Tax requirements are slowly changing around the world. Where physical documentation used to be mandatory, more and more countries are turning to digitised documents and fully paperless tax processes.
We know that employees enjoy a smoother experience claiming expenses with a mobile app. It allows them to scan their proof of purchase immediately, thus decreasing the probability of loss or destruction.
But for those days when things are just too hectic or they simply forget, the missing receipt affidavit is a useful tool to have in your expense management toolbox to keep your travellers and controllers happy.