Expenses

Changing Nature of Records

 

Cheques

In 1985 when I began work for the Canada Revenue Agency, 97% of payments were made by cheque. Today 86% of transactions are electronic…

 

 

 

While cheques are still a convenient way to pay or be paid, more and more Canadians are choosing…

  • pre-authorized debits
  • online banking bill payments
  • e-transfer
  • PayPal™

…or other forms of electronic payment.

Provided that your bank supports a reasonable retention policy for electronic records, this vastly simplifies the record-keeping function.

Cheque History

Above I have reproduced the “Custom Search” screen from CIBC’s online banking app. Using their app I was able to recover a cheque image from 6 years earlier – see below:

Cheque Image

If your bank maintains this information for you, that means you can rely on something simpler – like cheque stubs – to share with your CPA or your bookkeeper. While the cheque image is a better “quality” record than a cheque stub, it is easy to take a picture of a stack of cheque stubs with your smart phone and send it to the person doing the bookkeeping.

The key to handling expenses in terms of records management, is to quickly and simply share images of the best possible evidence of a transaction. For recording transactions, the person doing the recording must understand what occurred. For supporting transactions in a tax (or financial audit), the quality of the record is also important. For that reason an auditor may ask to see a sample of the cheque images to get confidence in the reliability of your system.

e-Transfers and Other Online Banking Transactions

  • pre-authorized debits
  • online banking bill payments
  • e-transfer

If your bank is like mine, there is adequate information on both the bank statement and within the downloaded CSV (comma separated value) files to determine who was paid and how much. Of course sometimes you buy a variety of different goods from some suppliers. You may need to see the receipt or invoice to know how best to categorize it.

And…you’ll still need to prove what the payment was for, if you’re audited. You should therefore try and keep copies of the invoices that underlie the payments.

These days a great many purchases are made online and receipts or acknowledgements are attached to confirmation emails by the seller.

eMail Attachment

 

Since these records were initially created as image files, it only remains to forward the email to the bookkeeper or save it in a shared directory.

 

 

 

 

 

Sharing Images

These days most of us have used some form of cloud storage for computer files of one kind or another. Each of the common applications listed below, allow images to be stored online and have “sharing” access delegated to third parties.

  1. GOOGLE DRIVE
  2. MICROSOFT ONEDRIVE
  3. DROPBOX
  4. SHAREFILE

Alternatively, image files of transaction records can be stored locally and systematically shared using online forms – or simply by sending them as attachments to the person responsible for bookkeeping.

Creating an Image of a Record

Earlier we discussed receipt imaging applications. However these days you don’t need a dedicated application. Almost any smart phone with a camera will allow you to simply take an image of a paper receipt or invoice and share using 1 of 2 approaches:

1 Saved to a shared location on a cloud drive

….OR

2 Email to an administrator or bookkeeper