Between the constant influx of junk mail and the steady stream of literature from credit card processing companies, it’s no wonder that you and most other small business owners feel like you are drowning in a sea of paper. Add to that the ever-growing pile of customer receipts you know you should be saving, and it brings you to the inevitable question: Is there a protocol to be followed when it comes to managing these receipts?
A Necessary Inconvenience
There is an old saying, “If it wasn’t written down, it didn’t happen.” This adage definitely applies to the business world, and that’s where receipts are invaluable. They are tangible, mutually understood documents that show when and where a purchase was made as well as its monetary amount. Customers can use them as proof of purchase should problems arise with a product or service, and merchants constantly depend on receipts to balance their books and prepare for tax time.
When Chargebacks Occur
While you will definitely need to peruse your receipts as you prepare your business taxes, this is not the only situation in which they will come in handy. From time to time, all business owners encounter instances when customers request to reverse a credit card transaction for any number of reasons.
One particular example in which a chargeback can be requested occurs when the customer claims that she never made the purchase in question. In this case, your receipt can provide strong verification that her allegation is false. On the other hand, you might be required to pay the customer’s credit card company the full price of the product in question if you are unable to produce a copy of the receipt.
Strategies for Managing Your Receipts
It is vitally important that customer receipts are kept organized and stored securely. Dedicating time every week to keeping your financial house in order will be invaluable as you balance your books and budget for future needs. Most tax experts recommend that you hold onto your receipts for at least three years in case you need to produce them for an audit. If they contain sensitive customer credit card information, be sure to lock them in a location to which only you and one or two other trusted employees have access. If they have been digitally scanned, password protect the electronic file. When the time comes to destroy the receipts from a past year, be sure you do so using a high-quality shredder.
Don’t let your customer receipts become just another chaotic mountain of paper shoved into file drawers. Take the time to organize and manage these documents, and they can prove to be invaluable tools as you balance this year’s budget and plan for the future.