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Posts are primarily about QuickBooks, Xero, expense reports, and other topics useful to small business owners, CPAs, and ProAdvisors.

 


Credit Card Receipts vs. Out-of-Pocket Receipts

June 12th, 2013

Your credit card receipts and out-of-pocket receipts are both important to your company’s financial records. If you are an employee, your manager has probably had the occasion to remind you of this, when your expense report is overdue. If you are a company owner, your CPA has probably had the occasion to remind you of this, at tax time. And, if you are a CPA representing your client in an audit… well, lets not go there.

Credit Card Receipts vs. Out-of-Pocket Receipts in QuickBooks

When it comes to tracking expenses in QuickBooks, QuickBooks thinks of your company card expenses in a very different way than your out-of-pocket expenses. To understand why these two types of expenses are very different from an accounting perspective, just follow the money trail.

For a company card expense, an employee purchases a good or service using their company card, then the card provider includes the transaction on a monthly statement, and the company is responsible for paying off the monthly statement via a check or ACH transfer to the credit card provider. Hopefully somewhere along the line the employee submits the credit card receipts to justify the transactions.

In contrast, for an out-of-pocket expense, an employee purchases a good or service using a personal payment method of their choice (lets assume cash), then tells the company about the expense and provides supporting documentation, and the company issues a check or ACH transfer to the employee to reimburse them for the expense.

Not much similarity in terms of the money trail, right? That explains why the accounting for these two types of expenses are very different.

Credit Card Expenses in QuickBooks

If your company uses QuickBooks, your credit card expenses are almost certainly syncing into dedicated credit card registers in QuickBooks, using Online Banking. Or perhaps you have ProOnGo syncing the transactions from your financial institution and relaying them into a QuickBooks credit card register.

Either way, the point is, the transactions are arriving in QuickBooks automatically and all that is left to do is to categorize the transaction and to keep track of the credit card receipts that go with it. Presuming you have ProOnGo’s 2-way credit card sync set up with QuickBooks, you can just forward your receipt images in to the email address shown in the bottom-right corner of your Corporate Card Expenses subtab:

Emailing In Credit Card Receipts
Emailing In Credit Card Receipts

We’ll then “match up” the receipt to the correct credit card transaction in your expense list, without you having to manually search for the transaction.

Credit Card Receipts vs. Out-of-Pocket Receipts

In comparison, Out-of-Pocket receipts are a very different situation. For out-of-pocket expenses, QuickBooks has no means by which to retrieve the transaction automatically on your behalf. After all, perhaps you made the purchase with cash, perhaps a personal check, or perhaps with a personal credit card. It would be a very bad idea to sync a personal credit card into QuickBooks — your company file would soon be inundated with personal transactions that have no business being in your company’s accounting data.

So, suffice it to say, QuickBooks isn’t going to magically “know about” your out-of-pocket expenses. However, you can still file your expenses just by forwarding in a receipt — this time look for the email address in the bottom-right of the Out-of-Pocket expenses tab:

Emailing In Out-of-Pocket Receipts
Emailing In Out-of-Pocket Receipts

When you forward receipts in to that address, an entirely fresh/new transaction will be created in ProOnGo, with the merchant name, date, and amount filled out – ready for you to submit to your manager, who will then approve the transaction and send it to QuickBooks. If you are both the submitter and the manager (i.e. if you are the company owner submitting your own expenses), then you can both submit + approve, or turn on auto-approval for yourself.

Either Way, Send in Those Receipts!

Bottom line: whether you use a company card, or do out-of-pocket expenses, or use both… well, no matter your situation, there is a way to forward your receipts in to ProOnGo and to have your expense information tracked correctly.

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