An itemized receipt can ensure complete financial legitimacy for all business transactions, from reconciling employee spend to maintaining records for tax purposes. An itemized receipt is also a more transparent collection of data for companies looking to better understand how their employees are utilizing company funds.
Everyday receipts and itemized receipts share several similar qualities. On both, employers will likely see:
Some receipts may also include return policies, phone numbers, or alternative contact information. However, itemization will provide a more detailed receipt that will display all of the above, plus:
Often, a single transaction has multiple parts that must be reported independently for accounting and tax purposes. Employees may need to obtain a receipt when paying with a corporate card or credit card so employers can determine if they are spending within policy.
Employees may also provide an itemized receipt when submitting reimbursement requests for business expenses charged to their personal credit cards. For employers, this proof of payment may act as the only confirmation of what employees are actually buying.
If an employee goes on a business trip and books a hotel for a total of $553 for the entire stay, their transaction will be filed solely as “Lodging” in an accounting system based on a single receipt. However, multiple transactions may be occurring within that total amount that needs to be tracked separately for accounting leaders.
A typical receipt:
A receipt with an itemized list:
By requiring an itemized invoice or receipt, employers get a more granular view of an entire journey and can appropriately assign travel and expense policies accordingly.
Itemized receipts can also act as a deterrent for employee fraud. Because each item is listed individually, out-of-policy purchases are recognized and denied reimbursement.
For instance, many employers do not cover alcohol in an employee’s per diem on meals. An itemized receipt will extract these from a final expense reconciliation so the company does not pay for them.
Employees may also attempt to purchase personal items on company cards that can be hidden in receipts that would be considered in-policy — like buying a book and phone charger for a flight at a bodega that also sells food and coffee.
Because many employees submit unitemized receipts, closing the books each month can be a manual nightmare. Many businesses have yet to adapt their tools to give finance teams the necessary efficiency.
By automating this process, finance teams can ensure all expenses are correctly accounted for. While legacy systems on the market provide rigid and manual processes, Navan is changing that narrative with Auto-Itemization. Powered by machine learning, this solution automates the itemization process and gives employees the gift of time so they can focus on higher priority tasks.
With Auto-Itemization, employees, teams, and finance leaders get an itemized breakdown of expenses within an invoice/receipt and can enable users to assign the correct expense type, GL code, and custom tag to each line item. The solution can also separate business expenses from personal expenses and track and flag out-of-policy spending.
The technology also works on an international scale, with language detection and text translation for global purchases.
With Auto-Itemization finance teams are given the power to increase efficiency as travel returns and hotel stays—the most common transaction to require itemization—gain traction globally.
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