Chartered Accountant and Fintech Specialist
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The future of receipt capture

Receipt capture apps are in the news again with Receipt Bank’s latest $73m investment round. Nick Levine takes the opportunity to review where this segment of the cloud ecosystem is heading.

28th Jan 2020
Chartered Accountant and Fintech Specialist
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Where are receipt capture apps heading, asks Nick Levine
iStock_Receipt capture_fevziie ryman

Receipt capture apps have been natural bedfellows for cloud accounting software throughout its relatively short evolutionary phase.

Companies like Receipt Bank and AutoEntry were quick to realise that they could automate purchase invoice entry in a similar way to how bank feeds automate bookkeeping entries for cash spent and cash received.

The accounting app marketplaces reflect how this category of apps quickly rose to the top of the league table. Accounting firms have played a role here, too, with many offering a monthly subscription service that combines online bookkeeping with a receipt capture tool.

But over the past 12 months, we’ve seen the relationship move to a new level, with Sage acquiring AutoEntry and Xero announcing that Hubdoc (purchased in 2018) will be available as part of core subscriptions.

Apps that evolved as standalone receipt capture tools are having to rethink their core strategy and are starting to seek partnerships beyond the core accounting platforms, such as banks and other B2B focussed fintechs. 

Topping the add-on charts

Receipt capture tools took off with the mass adoption of smart devices. Users could snap a picture of a receipt with their smartphone and send it straight through to the accounting ledger, rather than having to stuff an envelope full of receipts and send it to providers.

After the recent wave of acquisitions, Receipt Bank stands apart as the pre-eminent independent player in this market, and currently scans 2m receipts every week. Even as observers speculate whether it might be the target of a takeover bid from US giant Intuit, Receipt Bank is an attractive proposition that gained a new injection of $73m from investors led by Insight Partners.

Despite becoming part of Sage and Xero, Hubdoc and AutoEntry do not have Receipt Bank’s reach. But as their functionality is built into the underlying platforms, they are likely to increase their profile among accountants.

At Xerocon last year, for example, Xero announced that Hubdoc would be featured for free as part of their core subscriptions from March. This prompted accountants at the event to debate whether it was worth continuing their subscriptions for data capture apps. 

Despite the speculation, QuickBooks is focusing attention more on its own receipt capture tool. Details around its UK roll-out are due to be unveiled at this year's QuickBooks Connect event, where it is expected the new capabilities will be included as part of the standard QuickBooks online subscription. 

Expense management tools 

There’s a thin dividing line between data capture (or “pre-accounting”) apps and expense management, where developers are starting to diversify their offerings and business models by incorporating elements of both.

This relatively new category, led by Soldo and Pleo, empowers companies and their employees to manage their company and employee expenses by providing them with prepaid debit or credit cards to make purchases. Like data capture apps, these companies integrate with accounting platforms to make reconciliations easy. 

They are also able to generate ancillary revenues by taking interchange fees for the transactions that flow through them. 

This approach has already been adopted by Receipt Bank, which launched its own employee expense credit card in conjunction with Capital On Tap last year. Expensify is also expected to bring its payment card to the UK market later this year. 

The evolution of receipts

Data capture apps grew out of optical character recognition (OCR) technology that has been applied to scanned invoices and receipts since the early 2000s. In the not too distant future, this image scanning technology will be complimented by invoice fetch tools, or digital receipts such as Flux.

This relative newcomer generates fully itemised receipts, including line items and VAT data, from within banking apps and currently integrates with Barclays Launchpad, Starling and Monzo. 

While Flux is yet to integrate with data capture apps, co-founder Veronique Barbosa sees an opportunity to supplement existing technology: “Flux’s digital receipt technology will co-exist for many years alongside paper receipts and OCR scanning. 

“There are 11.2bn receipts printed in the UK annually and we are realistic that Flux won’t replace these overnight. But our exponential growth means we are capturing receipt data at pace.”

Expanding partnerships

As last week’s AccountingWEB interview demonstrated, Receipt Bank still sees a huge opportunity for data capture apps. The new investment round will help the market-leader refine its strategy and build new partnerships with banks and other fintechs. 

Receipt Bank remains on good terms with the cloud accounting providers, but emphasises its ability to pull data from other data sources that will benefit small businesses and accountants.

“Many banks want to offer data extraction solutions to their business customers. With Receipt Bank being the global leader for data extraction, it makes sense for us to offer our capabilities to provide this solution,” said Oliver Smith, Receipt Bank’s director of strategic partnerships and networks.

“As a result, we are already partnering with several fintechs, including banks, and the future will see us scaling-up those partnerships.”

Competition in the data capture category will ultimately help accountants better serve their clients and increase their margins if they can get data capture as part of their core bookkeeping system. But third party apps are likely to be better at supporting consistent user experiences across different accounting platforms and plugging into new data flows from other sources.

Replies (4)

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By johnjenkins
30th Jan 2020 10:26

So how does this process take out cigarettes, food etc. from a fuel bill?
How will it take out personal expenses from a builders merchants?

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Mohit Baheti
By camohitbaheti
30th Jan 2020 11:07

wow, an app capturing a digital version of a receipt. That's the highest level of backward integration possible in the digital accounting world.

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By johnt27
30th Jan 2020 12:00

For me the real opportunity for RB is to push into integration with the wider app ecosystem. There's a big issue in this space where you use an app like, for example, Unleashed where PO and PI processing is dealt with in the app before being pushed to Xero. There are workarounds to the problem but they lack finesse and don't actually provide the real benefits of the app - data extraction removing the need for manual processing. The result is that you automate the processing of overheads but manually process the bulk of purchases.

I do realise there are apps that partially solve this problem (Lightyear and Aptimise being a couple) but they are pretty niche and don't feature wider app integrations either.

The Sage acquisition of AE is likely to slowly kill their subscriber numbers where they use alternative providers, but will increase on the Sage side if their sales team hit the phones. The Hubdoc freemium offering will increase usage of OCR at the bottom end of the scale where business couldn't justify the cost of extraction tech for a handful of invoices a week but these were never on the RB radar anyway.

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Replying to johnt27:
By johnjenkins
30th Jan 2020 13:50

Don't forget, though, once Iris get their hands on the infinity stone app (who's to say they haven't already) it could be Lightyears before integration could be aptimised and unleashed on the Accountancy world.

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