What are receipt scanning apps and how can you use them?

A receipt-scanning app captures and stores receipts from purchases and other important documents in an accessible digital format. After you’ve scanned your documents, files or receipts, you can build up a database to track trends, purchases and anything else you may want to monitor.

Receipt-scanning apps can be a useful tool for budgeting, especially if you use cash for certain purchases that otherwise wouldn’t automatically be digitally tracked.

How receipt-scanning apps work

The technology behind these apps is optical character recognition (OCR), which converts images of text into machine-readable text. While various receipt-scanning apps offer different features, the basic setup process is generally similar:

1. Download the app: Visit your device’s app store and download your chosen receipt-scanning app. Most apps work with both iOS and Android. Check whether the app is free or requires a paid subscription.
2. Create and set up your account: Complete your account setup in the app. Depending on the app, you may need to create a password and connect your bank accounts, digital wallet or other financial accounts.
3. Scan receipts: To digitize a receipt or document, simply take a photo of it within the app (after granting camera access). After the photo is taken, the app will take data from the document, including purchased items, store location and purchase amount.
4. Organize your digital data: The app saves your digitized files for easy access. You can typically search through the documents in the app and even categorize or filter them using keywords.

Common uses for receipt-scanning apps

Receipt-scanning apps serve multiple purposes. Here are the most common applications:

Expense tracking

No more shoe boxes of receipts from years past. You can reduce the amount of paper you hold onto by scanning and storing everything digitally. Receipt-scanning apps make quickly organizing and retrieving purchase information easier for expense tracking.

This can be particularly useful for creating and maintaining a budget as a business owner or for your personal finances. Once you’ve categorized your expenses using the app, you can analyze your spending habits, identify areas where you can save and create a strategic plan for the future.

Expensify has many features that make it one of the best receipt-scanning apps for individuals, freelancers and small businesses. The app allows users to scan receipts, track expenses, generate expense reports, reimburse employees and send invoices.

Expensify integrates with over 45 types of accounting software and tools, like QuickBooks, NetSuite and Gusto. It’s free to use as an individual for up to 25 monthly scans. Annual subscriptions for companies start at $5 per user per month.

Tax preparation

Filing taxes can be difficult if you don’t have easy access to your financial records and documents. Fortunately, receipt-scanning apps make the process easier by providing a reliable way to keep your tax records compliant with the IRS.

Storing digital copies of your records can be safer than relying on paper documents, which can be lost or destroyed. You can also use your digital records to generate reports that help you prepare your tax filings.

Shoeboxed is a receipt-scanning app used by over one million businesses. It automatically extracts data from your receipts to make expense reports, financial statements and tax preparation documents. The app creates digital images that the IRS and Canada Revenue Service will accept if you undergo an audit.

Shoeboxed automatically categorizes your data into 15 tax categories and allows you to add your tax professional to your account to help generate tax reports. Plans start at $18 per month.

Employee reimbursements

Employees’ financial activity is important to track in any company, large or small. Luckily, companies can use receipt-scanning apps to track employee spending and reimbursements. Employees can quickly scan and upload their receipts directly to the app, where their company’s accounting department can access them easily. Many apps integrate seamlessly with accounting software and tools, but double-check that the app you choose offers the integration you need before committing.

QuickBooks’ receipt-scanning app is a good example of this. The app scans receipts, extracts information and integrates the data automatically with your QuickBooks Online account. You can then use the data to create a variety of reports within QuickBooks, such as expense reports for reimbursements.

To use the QuickBooks receipt scanner, you’ll need to pay for a QuickBooks Online account. The regular price for the lowest-priced plan — the “Simple Start” — is $35 a month, although the company sometimes offers promotions for up to 50 percent off.

If you don’t need all the features of a QuickBooks Online account, you might consider saving money with another receipt-scanning app, Zoho Expense. The app has a free plan — ideal for freelancers and small businesses — and paid plans starting at $4 per user per month billed annually (minimum three users).

Earning cash-back rewards 

Some receipt-scanning apps offer you cash back and other rewards for purchases. In exchange for using the app to scan and submit your receipts, you’ll earn cash, points you can redeem for gift cards or other rewards like discounts, coupons or entry into a sweepstakes drawing.

These cash-back apps are typically free for you to download and use. The apps make their money by promoting specific products, brands and retailers. Some also earn money from advertisements and selling users’ shopping data to market research companies. They then share their commission with users in the form of cash back.

Many apps accept receipts from a wide range of retailers. Depending on the app, you might earn cash back from grocery stores, gas stations, restaurants, department stores and convenience stores. You can earn cash back from both in-store and online shopping. And it’s not just everyday purchases that earn rewards. Some apps offer cash back on big-ticket items like flights, hotel stays, car rentals and vacation packages.

Here are some of the best receipt-scanning apps for receiving cash back:

• Ibotta is best known for its cash back on groceries and retail purchases. You’ll need to select your offers from the app before you make your purchase and scan your receipt. Ibotta reports that its average user earns $256 a year in cash back.
• Fetch is simple to use and doesn’t require you to select your offers before submitting your receipts. Your receipts earn points, which you can redeem for gift cards to popular retailers like Amazon, Target and Nike.
• CoinOut allows you to submit receipts from almost any in-store or online purchase and earn “Coins,” which you can redeem for gift cards. You can earn additional Coins by completing simple tasks like snapping photos of product barcodes while shopping.

Pros and cons of receipt-scanning apps

Receipt-scanning apps offer several advantages, but it’s also important to be aware of the downsides of relying on digitized documents. Here’s a look at the pros and cons of scanning your receipts.

Next steps

Using a receipt-scanning app is a strategic way to organize your finances, eliminate the need to hold onto paper receipts and gather critical financial data for tax preparation and expense reporting. These apps are useful for business and personal budgeting and financial needs.

Using receipt-scanning apps to organize your financial life is just one way to level up your fiscal foundation. Start building out your budget today by learning how much you should save each month or check out more finance apps you can use to make the most of your money.