What Is the Purpose of a Receipt?
The primary purposes of a receipt include providing information to customers or donors, documenting purchases and assisting with internal accounting. Both for-profit and nonprofit organizations have reasons to give receipts to patrons.
Receipts serve as an effective communication tool with customers. First, they note the details of a customer's purchase, including itemized products and services, unit prices, subtotals, taxes and totals. The receipt also indicates the date of purchase, which is especially important to business buyers that use receipts to record transactions. Receipts also communicate company policies and offer discounts for follow-up surveys.
Businesses keep copies of receipts for internal accounting. Receipts allow for accurate tracking of sales and revenue. When a question arises about the details of particular transactions, the company's bookkeeping or accounting department can reference receipts. Also, when a business faces an Internal Revenue Service audit on its tax returns, receipts serve as valuable documentation of sales transactions. A receipt also notes any discounts on sales or allowances, which are used for accounting and financial reporting.
Companies that offer returns and exchanges policies often require a receipt as part of the process. When a customer gets the wrong size in an outfit or a part that doesn't fit, he typically presents the receipt to the retailer to return the item. Without a receipt, he might only be able to exchange the item for a similar-priced item. The receipt also conveys important information about the return policy, such as how many days from the date of purchase a customer has to return items.
The purpose of receipts for nonprofits is very distinct. Individuals or businesses wanting to claim cash or gift contributions to an IRS-recognized 501(c)(3) nonprofit organization normally need a receipt, according to the IRS website. For example, people who donate items to Goodwill or the Salvation Army need a receipt to deduct the value of their contributions. Not only do the receipts help in accurately entering charitable contributions when filing taxes, they also provide documentation of the contributions during an audit.