Receipt scanning tools: Which is best?
Receipt scanning experts Nick Levine, Will Farnell and Matt Flanagan compare the main players in the market, whether standalone or integrated solutions are better, and what the future holds for receipt scanning.
Receipt scanning is one of the most effective means of driving automation in bookkeeping. The popularity of this approach to transaction data collection began to spike just under a decade ago, with the advent of smart devices that made it easier to upload and send receipts and invoices while on the move.
Receipt Bank is currently used by more than 400,000 small businesses and 10,000 accounting firms, and over 400m transactions have been processed to date. “This is exponential growth and is not going to disappear anytime soon,” said chartered accountant and fintech specialist Nick Levine in his latest AccountingWEB Live webinar Receipt scanning: Which tool is best?
It should come as no surprise during 2020 that the use of these applications has mushroomed as accountants reached for apps that helped them capture and streamline clients books remotely during the coronavirus lockdown. Where 12% of the total accounting population recorded in our 2019 software survey also rated an expenses data capture app, the figure more than tripled to 45% this year.
However the receipt scanning market has been consolidating in recent years. Xero acquired Hubdoc in 2018 in a deal worth around $70m. Then Sage purchased AutoEntry in 2019. With the big accounting engines moving to build in receipt capture, standalone products are looking for new ways to differentiate themselves in the marketplace.
Sage’s AutoEntry subsidiary bagged the biggest share of the vote in AccountingWEB's 2020 software survey, but was beaten to the customer satisfaction prize by FreeAgent Mobile. To reinforce how the market has shifted towards built-in apps, Receipt Bank’s share of the ratings fell back this year.
Why is receipt scanning so popular?
“If general ledgers want firms to get the most out of their platforms, they’ve got to be having a conversation about the pre-accounting part,” said Farnell Clarke founder and App Advisory Plus co-founder Will Farnell. “It’s like not putting a stamp on a letter before you post it.”
Appacus co-founder Matt Flanagan agreed: “I think it’s an obvious area which fixes a problem even without impeding efficiency. The general ledgers describe themselves as real-time, but we’re not always getting that data regularly enough. We might get it in a more efficient manner, collecting it via an app etc, but we should have more real-time data to be more relevant with what you’re talking to your clients about.”
Many users complain that these tools are too slow, he continued. “The reason they’re not quick enough is you’re trying to put 90 days’ worth of VAT return in on your final payment. Yeah, it is pretty quick, but it still can’t do 90 days’ worth in a day. It’s great if adoption takes, but the process and the comms are more important in my opinion.”
Will HMRC accept digital copies?
The question of evidence cropped up during the webinar. If you’ve got a digital copy of a train ticket, how can you prove it isn’t a copy of someone else’s? How do you prove the validity of digital receipts?
HMRC’s basic guidance on record-keeping confirms the validity of electronic documents. “We’ve run HMRC VAT inquiries and HMRC has been quite happy with the evidence we’ve provided,” said Farnell.
“We’ve never had a problem. And with MTD, I think there’s an acceptance business is done this way now because most people are not going to be scanning paperwork for archive anymore.”
Receipt scanning vendors compared
If you’re an accountancy practice looking to bring bookkeeping in-house to get more regular data, standalone products such as Receipt Bank and Datamolino offer a lot of visibility with customised dashboards. However, solutions running in tandem with bookkeeping platforms such as AutoEntry (Sage) and Hubdoc (Xero) will offer a broader client view for client tracking.
“There isn’t a perfect product, so it’s really important we understand they all differentiate to a point,” said Farnell. “The way that we’ve deployed these tools, I think it would actually be harder for us to move from a standalone product than from a general ledger, because that’s the front end that clients interact with.”
But what happens to a firm after three years when it has a much deeper integration with one product? A vendor-agnostic option will offer more flexibility when considering the future.
Rating the tools
“In my opinion, Receipt Bank and AutoEntry are more sophisticated in terms of breadth of functionality,” said Farnell. “When we get down to granular functionality, AutoEntry probably is stronger. But what Receipt Bank does better is provide a bookkeeping management solution the way [accountants] use it, so the dashboard and the functionality drive our bookkeeping processes. But AutoEntry has greater functionality with supplier statements, line extraction and so on.
“And then you’ve got Lightyear coming in with approval workflows and Easy Bills which has really good third party integrations to inventory products. But Receipt Bank would be our core solution.”
For Farnell, AutoEntry provides the best line item functionality, while in comparison Receipt Bank’s offers the accountant limited control over billing. Clients could turn on the feature, charging accountants and causing potential issues with recharging the bill to the client.
Not every client fits one tool. Specific client requirements take receipt scanning beyond data collection into managing the accounting and reporting process, “which is why we use Receipt Bank – the vast majority of our clients are doing just that”, commented Farnell.
For Flanagan, these subtle differences highlighted one of the dangers of navigating the accounting ecosystems. “Picking an [accounting] app is not like picking an app off your smartphone, there needs to be more understanding of specific requirements, added Flanagan.
Receipt tool acquisitions
The acquisitions taking place in this sector include not just Hubdoc and AutoEntry – Wolters Kluwer also owns Basecone while Receipt Bank itself bought Xavier earlier this year. The panel predicted more acquisitions on the horizon as a cash exit is what many specialist developers are looking for.
Flanagan envisages a near future without receipt scanning, where fully automated digital invoices will attach themselves to bank feeds for automatic reconciliation. Receipt Bank’s acquisition of Xavier Analytics suggests the developer is attempting to diversify away from pure transaction capture.
“I’d imagine the other receipt scanning or standalone tools will need to think about what their diversification path is,” said Flanagan.
“I think the acquisition was really smart,” added Farnell. “Receipt Bank have positioned themselves for a long time as efficient bookkeeping and that’s what Xavier is all about in terms of ensuring data quality.
“I think once they really blend those products, [it will] reinforce the proposition to the ReceiptBank’s core market: accounting and bookkeeping firms.”
Receipt Bank recently integrated with ApprovalMax to make purchase order approval and payment processes run more seamlessly. As the biggest independent player, Receipt Bank has had a lot of investment, which could make it a strong purchase opportunity for accounting platforms in the future.