What is a voucher?
The word “voucher” is derived from the French word “voucher”, meaning “to provide proof”. In business, a voucher is any written document that supports an account entry.
A voucher is a document which gathers all the information about an expense and submits it for approval as an expense. The process only sounds confusing but it is as easy entering information about GST in tally. Visit Khatabook to learn more about it.
The most popular vouchers come from companies and are used as receipts for goods or services supplied or money paid to employees. Vouchers are also used for refunds and purchases with credit cards, as well as for travel expenses and mileage claims.
Are you wondering what is voucher in accounting and how it impacts bookkeeping? Well, accountants use vouchers to record business transactions and maintain accountability for items purchased, sold, delivered, or paid for. They are often considered an effective way to monitor financial transactions because they link related documents together in chronological order. This can help prevent fraud by preventing employees from altering information after a purchase has already been made. For example, an invoice might be inflated or a cheque number altered so that it can be reused to make payments to different creditors. A voucher system makes it easier to detect these types of fraudulent activities.
In account payable systems, a “payment run” produces payments based on the unpaid vouchers. your accountant may use the voucher for making adjustments to account in your general ledger. In such cases it is referred to as journal voucher.
History of vouchers
The voucher system was developed during the nineteenth century as a means to control corruption and fraud in public spending. It was strongly criticized at first because it reduced significantly the discretionary power of public functionaries and therefore affected their ability to build corrupt networks. However, it later became widely adopted across most countries as it reduced fraud, increased efficiency, saved time and money for the government, and made transactions more transparent for citizens.
Why are vouchers important?
There are many benefits of vouchers such as:
- Vouchers offer greater flexibility in payables processing. With it you can keep a closer eye on your payables process.
- Cheques can be used to pay off multiple invoices at one go, this in turn would reduce the number of invoices to be issued.
- It makes keeping a track of the audit trail a lot easier. This is because it can be pre-numbered
- The approval and payment of invoices are separated to improve productivity. This allows to plan better. The cashier will collect payments owed to the organization, and report back to the treasurer.
- Can reduce the cost of audit
What information does a voucher contain?
The contents of a voucher include:
- An identification number of the supplier
- The amount that is payable
- Stipulated date of payment
- Accounts payable
- Whether there are discount terms applicable on early payments or not and if yes then the details of it
- Signature or stamp approving the voucher