What are expense receipts and how should I track them?

An expense receipt is a document that proves a business-related purchase was made. It serves as the official record of a transaction, showing what was bought, when it was purchased, how much it cost, and who sold it. For businesses, expense receipts are a critical aspect of accurate expense reporting and tax compliance.

Expense receipts are the paper trail that connects your company's spending to legitimate business purposes. When an employee buys office supplies or books a flight for a conference, the receipt they receive becomes part of your company's financial records. These documents verify that the expense actually happened and that company funds were used appropriately.

Expense receipts differ from regular receipts in one key way: they're specifically tied to business expenses that will be reimbursed or deducted for tax purposes. While a personal receipt for groceries stays in your wallet, an expense receipt for a business lunch needs to be submitted, processed, and stored depending on company policy and IRS guidelines. And it doesn’t matter if the receipt is digital or paper; both are valid.

The key components that make a receipt valid for expense purposes include the vendor's name and address, the date of purchase, an itemized list of what was purchased, the total amount paid, and the payment method. Without these elements, a receipt might not meet IRS requirements or company reimbursement policies, potentially leaving employees without reimbursement and companies without proper documentation for tax deductions.

Business expenses come in many forms, and so do their receipts. Understanding the different types helps finance teams set appropriate policies and ensures employees know what documentation to collect for each purchase.

Paper receipts

Paper receipts are still common for in-person transactions, and these include register receipts from office supply stores, restaurant bills, parking garage tickets, and taxi receipts. While they're immediately available, paper receipts fade over time and are easily lost, making digital copies essential for long-term storage.

Digital receipts

Digital receipts are available via email or download from online platforms. These include booking confirmations for flights and hotels, invoices from SaaS subscriptions, receipts from ride-sharing apps, and online purchase confirmations. Digital receipts are easier to store and search but require employees to forward them properly or save them from their personal accounts.

Credit card statements

Credit card statements can supplement receipts but rarely replace them. While they show the date, vendor, and amount of a transaction, they lack the itemized detail the IRS (and company policies) requires for many expenses. They work best as backup documentation when paired with actual receipts.

Invoices

Invoices function as receipts for larger purchases or ongoing services. These detailed documents typically come from vendors for consulting services, equipment purchases, recurring software licenses, or contractor payments. Invoices often include payment terms and purchase order numbers that allow for accounts payable matching.

Mileage logs

Mileage logs serve as a special type of expense documentation and can be necessary for mileage reimbursement. For employees using personal vehicles for business, these logs must track the date, destination, purpose, and miles driven. The IRS requires mileage records to be recorded at or near the time of travel.

Per diem documentation

Per diem documentation replaces individual meal receipts in some cases. When companies use per diem rates for meals and incidental expenses, employees need to document their travel dates and locations rather than collecting individual receipts. This approach streamlines tracking business expenses for frequent travelers while staying compliant with IRS per diem rates.

Not every business expense requires the same level of documentation, but knowing which ones need receipts helps companies stay compliant while avoiding unnecessary paperwork. The IRS and your company's reimbursement policies determine the documentation you'll need for different business expense categories.

Travel expenses typically require the most thorough receipt collection, with airfare, hotel stays, rental cars, and ground transportation all needing expense receipts regardless of the amount. Even a $10 airport shuttle ride needs documentation, as travel expenses face extra scrutiny during audits. Hotels should provide detailed receipts showing room rates separate from taxes and incidentals, while airline receipts must show the traveler's name, flight details, and fare breakdown.

Meals and entertainment expenses have specific documentation requirements beyond just the receipt. For any business meal, you'll need to record who attended, their business relationship, and the business purpose of the meal. The receipt itself should show an itemized breakdown of food and beverages. Client entertainment follows similar rules but faces stricter deduction limits under current tax law.

Office supplies and equipment purchases always need receipts, particularly for items that could be used personally. Technology purchases require receipts that clearly show model numbers and specifications to justify the business need. This level of detail helps distinguish between business and personal use during expense reviews.

Professional services and subscriptions require receipts or invoices showing what service was provided, whether it's monthly software subscriptions or one-time consulting fees. Recurring subscriptions need documentation for the initial purchase and any changes to the service level or pricing, ensuring you can track spending patterns over time.

Vehicle expenses split into two categories that require different documentation approaches. Actual expenses like gas, parking, and tolls need receipts, while mileage reimbursement requires detailed logs instead of receipts. Some companies require receipts for all parking charges, while others set a threshold amount, so it's important to know your specific company policy.

Expense receipts make expense reports verified business records. Without receipts attached, an expense report is just a list of numbers without substantiation, which is why both companies and the IRS require proper documentation.

Receipts validate each line item on an expense report. When an employee submits a $127.43 dinner expense, the receipt proves this exact amount was spent at a real restaurant on a specific date. It shows whether alcohol was included, how many people ate, and what was ordered, which are details that determine if the expense meets company policy and IRS requirements.

For managers, receipts transform guesswork into informed decisions. Consider a $200 line item labeled "office supplies." Without documentation, it's impossible to know whether an employee bought essential printer cartridges or questionable decorative items. The receipt provides context that managers need to approve expenses with confidence or raise red flags when something seems amiss.

Digital receipt attachment has helped streamline expense report processing. Instead of taping paper receipts to printed reports, employees now take photos or forward emails directly to expense management systems. This speeds up submission, reduces lost receipts, and creates searchable records that finance teams can access instantly during month-end close or audits.

Expense receipts within expense reports are important for employees, too. When questions arise about old expenses, receipts provide indisputable proof of legitimate business spending. They show that the employee followed policy and spent company money appropriately, preventing awkward conversations months or years later.

Valid proof of purchase includes more than traditional paper receipts, giving employees multiple options for documenting business expenses. Knowing what qualifies as acceptable documentation helps prevent reimbursement delays and keeps your expense reports compliant.

Original receipts remain the gold standard for proof of purchase. These include itemized receipts from vendors, detailed restaurant bills, hotel folios, and printed confirmations from online purchases. The key is that they contain all required information: vendor name, date, amount, payment method, and itemized details of what was purchased.

Bank and credit card statements work as secondary proof when original receipts go missing. While they lack itemization, statements confirm that a transaction occurred with a specific vendor on a particular date. Most companies accept statements for small expenses under $25, but larger purchases need more detailed documentation to meet IRS requirements.

Electronic receipts carry the same validity as paper ones. Email confirmations, PDF invoices, app-generated receipts, and digital receipts from online retailers all count as primary documentation. The IRS explicitly accepts electronic receipts, provided they contain the same information as paper versions.

Screenshots and photos of paper receipts are valid when they’re captured clearly and completely. A smartphone photo of a paper receipt works perfectly, as does a screenshot of an online purchase confirmation.

If receipts are lost, third-party documentation sometimes substitutes for missing receipts. Conference organizers can provide attendance confirmations with registration fees, hotels can reprint folios for past stays, and vendors can issue duplicate invoices. While not ideal, these documents satisfy audit requirements when original receipts are lost.

Affidavits or missing receipt forms work as last resorts for essential expenses. When no other documentation exists, employees can complete a sworn statement detailing the expense. Companies typically limit these to a certain number per year or dollar amount per incident, as they're the weakest form of documentation.

For many companies, modern expense management software can serve as an effective receipt management platform. The best expense management software often generates acceptable proof through integration with credit cards and vendors. When transactions flow directly from corporate cards into expense systems, the electronic record serves as valid documentation, especially when enhanced with employee-added details about business purpose and attendees.

The IRS sets specific standards for expense receipt documentation that every business must follow. These requirements protect both companies claiming tax deductions and employees receiving reimbursements, creating a clear standard for what constitutes proper expense documentation.

IRS expense reimbursement receipt requirements

The IRS mandates receipts for all lodging expenses regardless of amount, plus any other expense of $75 or more, if your business is going to claim a deduction. The $75 threshold has remained unchanged since 1995, making receipt collection standard practice for most business expenses. Below this threshold, employees can document expenses through expense reports or logs, but many companies require receipts for all amounts to simplify compliance.

Every receipt must include specific information to meet IRS standards. Required elements include the amount of the expense, the date it was incurred, the place where the expense occurred, and the business purpose. For meals and entertainment, you must also document the business relationship of anyone entertained. Without these five elements, the IRS can disallow the deduction entirely.

Accountable plans, which allow tax-free expense reimbursements to employees, have additional requirements. Expenses must have a clear business connection, employees must substantiate expenses within a reasonable time, which is typically 60 days, and any excess reimbursement must be returned within 120 days. Companies that don't follow accountable plan rules must treat employee expense reimbursements as taxable wages.

The IRS accepts any receipt as long as it’s legible and contains all required information. Because of that, credit card statements alone don’t meet IRS requirements for most expenses because they lack detail about what was purchased.

Special rules apply to certain expense categories. Vehicle expenses need either actual receipts for gas and maintenance or contemporaneous mileage logs. Gifts to clients or customers require receipts regardless of amount and face a $25 deduction limit per person per year. Mixed-use expenses, where personal and business purposes combine, need documentation showing the business percentage.

How long you should keep business receipts for

The IRS generally requires businesses to keep expense receipts for three years from the date they file the tax return. However, this baseline can be extended in certain situations, making longer retention periods prudent for many businesses.

Employment tax records, including expense reimbursements that affect payroll, need retention for four years. If expenses relate to property depreciation or amortization, keep receipts until three years after you dispose of the property. For businesses that filed a fraudulent return or failed to file at all, the IRS can audit without time limits, which can make permanent receipt retention advisable for businesses with past mistakes.

Beyond IRS regulations, state requirements can exceed federal minimums. Some states require four to seven-year retention periods for business records, and companies operating across state lines must follow the longest applicable requirement. International businesses face even more complex retention rules that vary by country.

Given the wide range of requirements, best practices suggest keeping receipts for at least seven years. This covers the IRS's six-year statute of limitations for substantial understatement of income and provides a buffer for state requirements. For major purchases, capital improvements, or anything affecting property basis, permanent retention prevents future tax complications.

Creating a consistent retention policy can protect your business during audits, and digital storage has made long-term receipt retention practical and affordable. Rather than keeping boxes of fading paper receipts, businesses can scan and store receipts electronically for decades. The IRS approves digital storage as long as the system accurately reproduces the original receipt and prevents unauthorized changes.

Building an efficient receipt tracking process starts with clear policies that everyone understands and can actually follow. The best processes make compliance easier than non-compliance, removing friction from expense reporting while maintaining the documentation your business needs.

Establish clear receipt policies

Start by establishing simple, consistent rules for receipt collection. Set clear requirements for which expenses need receipts, how quickly employees must submit them, and what format you'll accept. Communicate these policies during onboarding and provide regular reminders to keep them top of mind. Write policies in plain language that employees can reference easily, and create quick reference guides showing exactly what information receipts must contain.

Design your receipt workflow

Choose between centralized and decentralized receipt management based on your company size and structure. Small companies might have one person handle all receipt processing, while larger organizations can benefit from department-level expense coordinators. Either way, designate clear ownership for receipt collection, review, and storage.

Implement digital capture methods

Establishing a digital-first receipt capture process can streamline your expense receipt management. Require employees to photograph or scan paper receipts immediately after purchases, eliminating the risk of faded or lost documents. Setting up dedicated email addresses where employees can forward electronic receipts can create a centralized collection point.

Set up organized storage processes

Develop a logical filing structure for digital receipts. Organize by employee, date, expense category, or project, depending on what makes sense for your business. Use consistent naming conventions like "YYYY-MM-DD_VendorName_Amount" to make receipts searchable. As a part of this process, plan for long-term storage that meets IRS requirements. To effectively manage and organize business receipts, your platform should prevent tampering, allow easy retrieval, and maintain receipts for at least seven years,

Create accountability measures

Make timely, accurate receipt submission part of employee responsibilities, not an optional administrative task through the workflows you’ve established. Requiring receipts with any expense report can boost compliance rates and keep employees accountable.

Monitor and improve the process

Review your receipt tracking metrics monthly by reviewing when and where receipts go missing as well as how bottlenecks occur. Use this data to identify process improvements and policy updates. Gathering feedback from employees and finance team members regularly can help refine this process as they'll spot pain points and suggest practical improvements that make the system work better for everyone.

Modern technology has made receipt tracking an automated process that saves time and improves accuracy. The right combination of tools can reduce expense processing time by up to 90% while virtually eliminating lost receipts and data entry errors.

Expense reporting software

Expense reporting software is foundational for efficient receipt tracking. These platforms replace spreadsheets and paper forms with digital workflows that guide employees through expense submission. Employees upload receipt images directly to their expense reports, streamlining the process of adding documentation to reimbursement requests.

The top options offer mobile apps that let employees upload expenses on the go. Instead of collecting receipts weeks after a trip, employees can photograph them immediately and attach them to draft reports. The software stores images securely and links them permanently to specific transactions.

Integration capabilities multiply the value of expense reporting software. When these systems connect with your accounting automation software, approved expenses flow directly into your general ledger without manual entry. Connections to travel and expense management software automatically import flight and hotel receipts, while credit card feeds match transactions to uploaded receipts.

Automated policy enforcement prevents non-compliant expenses from entering the system. The software flags expenses missing receipts, amounts exceeding policy limits, or suspicious patterns. This real-time checking reduces the back-and-forth between employees and finance teams while improving policy compliance rates.

Optical character recognition (OCR) technology

OCR technology reads receipt images and extracts key data automatically. Instead of manually typing vendor names, dates, and amounts, OCR-enabled systems pull this information directly from uploaded receipts. This saves employees from having to manually upload data for each expense line item.

Modern OCR goes beyond basic text recognition with advanced systems identifying receipt types, categorizing expenses automatically, and even detecting potential duplicates. They can read receipts in multiple languages, handle various formats from different countries, and improve accuracy through machine learning.

OCR accuracy can make your receipt processing significantly more efficient. This technology can achieve 10x greater accuracy compared to manual entry which means finance teams spend time on analysis and strategy rather than fixing data entry mistakes.

Expense management software

Expense management software combines receipt tracking with broader spend control features. These platforms go beyond simple expense reporting to provide real-time visibility into company spending, automated approval workflows, and sophisticated analytics.

The best platforms use credit card data to automatically generate receipts, ensuring expense receipts can’t be lost. If a receipt isn’t generated but required, reminders can be sent to employees about receipts that haven’t been submitted and flags corporate card transactions missing documentation.

Approval workflows within expense management automations can route expenses to the right reviewers automatically, without any manual input. Multi-level approvals and parallel processing for different expense types keep receipts moving through the system without bottlenecks.

With the right software, finance teams can monitor spend as it happens with analytics capabilities that turn receipt data into actionable insights. Rather than just storing receipts for compliance, these systems analyze spending patterns, identify savings opportunities, and benchmark expenses against budgets or industry standards. Receipt details feed these analytics, making accurate capture essential.

Corporate credit cards

Modern corporate credit card programs are now powerful receipt tracking tools. When integrated with expense management platforms, corporate cards create digital trails that make receipt matching nearly automatic. Every swipe can generate a transaction record that serves as the foundation for expense documentation.

Virtual business credit card numbers take receipt tracking even further. For online purchases or recurring subscriptions, companies can generate unique card numbers tied to specific vendors or spending limits. When charges appear, the platform knows exactly what was purchased and can prompt for receipt upload automatically.

Smart receipt matching capabilities connect card transactions to uploaded receipts automatically. The system compares amounts, dates, and vendor names to suggest matches, reducing manual work. When employees upload receipts, the software immediately links them to the corresponding card transaction, creating a complete audit trail.

Beyond that functionality, built-in expense policies prevent receipt tracking gaps. Companies can require receipt upload before approving transactions over certain amounts or flag missing documentation on recurring reports. Some platforms can even temporarily suspend cards when receipt compliance falls below acceptable levels, motivating quick documentation.

Companies can easily fall into common receipt tracking traps that create compliance risks, frustrate employees, and waste valuable time. Recognizing these pitfalls and knowing how to avoid them helps build a receipt tracking system that actually works.

Waiting too long to collect receipts

The biggest mistake companies make is allowing receipts to accumulate before collection. When employees wait weeks or months to submit receipts, they lose documents and forget other important business details. Fix this by requiring receipt submission within 30 days, setting up automated weekly reminders, and making immediate submission easy through mobile apps.

Relying solely on credit card statements

While some companies may believe credit card statements provide sufficient documentation, statements lack the itemized detail the IRS requires for expenses over $75. Always require itemized receipts in addition to credit card records and use corporate card integration to match transactions with receipts automatically while maintaining documentation requirements.

Creating overly complex policies

Complicated receipt policies with dozens of exceptions and special cases guarantee non-compliance. When employees need a flowchart to determine whether they need a receipt, they'll either submit expenses incorrectly or avoid the process entirely. Simplify policies to basic rules that apply universally, such as requiring receipts for everything, using one submission method, and maintaining consistent approval workflows regardless of expense type.

Failing to go digital

Companies still managing paper receipts waste countless hours on data entry, physical storage, and document retrieval. Implement digital receipt capture immediately, require employees to photograph or scan all paper receipts, and store everything in searchable cloud systems that meet IRS electronic storage requirements.

Neglecting foreign currency documentation

International expenses create unique receipt challenges that many companies overlook. Receipts in foreign languages may not clearly show required information, and currency conversions add complexity to documentation requirements. Establish clear policies for international receipts and consider using expense management software that can translate and convert currencies.

Inadequate receipt retention

Many companies focus on collecting receipts but fail to store them properly for the required retention period. Throwing away receipts after reimbursement or storing them in ways that degrade over time creates major audit risks. Develop retention policies that meet the seven-year recommendation and use digital storage systems that prevent tampering or degradation.

Poor integration between software

Using disconnected tools for receipt capture, expense reporting, and accounting creates gaps where receipts fall through the cracks. When employees use a business credit card that is separate from their expense tracking interface that doesn’t sync with the general ledger, errors multiply and receipts get disconnected from transactions. Choose integrated platforms where receipts flow seamlessly from capture through reimbursement to accounting, maintaining connections throughout the process.

Selecting the right receipt and expense management software can transform your finance operations from a time-consuming hassle into an efficient, automated process. The best platforms combine powerful receipt capture capabilities with expense management features that scale with your business.

Brex is the best receipt and expense management software because it offers a unified spend management platform to manage all your business expenses, from receipts to coding and categorization. With Brex, expense receipt tracking is integrated into the Brex corporate card and expense management software, creating a seamless experience where every card transaction automatically prompts for receipt collection. This integrated approach eliminates the disconnect between spending and documentation that plagues traditional expense software.

Brex’s receipt capture technology stands out for its simplicity and accuracy. Most receipts are automatically generated, and all others can be photographed through the mobile app, forwarded to a dedicated address, or sent via WhatsApp. Advanced OCR technology extracts vendor information, amounts, and dates with high accuracy, eliminating manual data entry while maintaining audit-ready documentation.

Real-time expense tracking software gives finance teams unprecedented visibility into spending as it happens. Rather than waiting for month-end expense reports, managers can see expenses and their associated receipts immediately after purchases. This visibility helps catch policy violations early, identify spending trends quickly, and close the books faster at month-end.

Automated policy enforcement reduces the back-and-forth between employees and finance teams. The software flags expenses missing receipts, amounts exceeding predetermined limits, or categories requiring additional documentation. Custom rules can require receipts for all expenses or set different thresholds by category, adapting to your company's specific policies.

Integration capabilities extend the platform's value beyond basic receipt tracking. Direct connections to ERPs such as NetSuite and Sage Intacct eliminate duplicate data entry, while integrations with travel booking tools automatically import flight and hotel receipts.

For growing companies, scalability matters as much as current features. Brex handles everything from small teams submitting dozens of receipts to large organizations processing thousands of expenses monthly. Automated workflows and role-based permissions grow with your business without requiring system changes.

Josh Perrye, Director of Finance at PatientIQ, says his employees spend less time on receipts with Brex: “Brexʼs automated receipt capture makes compliance so much easier. Employees can upload receipts right to the app, via text, or email them to receipts@brex.com.”

Sign up for Brex today to revolutionize your expense receipt tracking and management.