Voucher Checks: Definition, Applications, and Pros & Cons in Financial Transactions
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Summary:
Voucher checks, a blend of checks and vouchers, serve as an official payment method creating a detailed audit trail. This comprehensive guide explores the intricacies of voucher checks, from their structure and purpose to their applications in both payroll and vendor transactions.
What is voucher checks?
A voucher check, often referred to as “remittance advice,” is a unique financial instrument combining the functionality of a check and a voucher. Its primary purpose is to create a thorough and auditable paper trail regarding the payment details of a transaction. Before the widespread adoption of computerized payroll systems, voucher checks were typically composed of three perforated parts on a standardized paper sheet.
Key components of voucher checks
In modern accounting systems, voucher checks consist of three essential parts that fit onto standard-sized paper sheets for convenient printing. The three components include the actual check, a voucher for the payee, and another voucher for the issuer. Perforations along the sheet make it easy to separate these sections efficiently.
Functions of the voucher check
The voucher check plays a crucial role in maintaining a clear and comprehensive record of financial transactions. When a voucher check is issued, the recipient detaches one voucher part and retains it for record-keeping purposes before cashing the check. Simultaneously, the issuer retains the other voucher portion, completing a well-documented paper trail.
Voucher checks in computerized accounting systems
In contemporary accounting practices, voucher checks used in computerized systems have evolved for ease of use. The three components—check, payee voucher, and issuer voucher—are designed to fit standard-sized sheets of paper. The checks are typically business-sized, longer than standard checks but with the same width, facilitating compatibility with standard printers. The use of perforations makes it convenient to separate the different sections without compromising the integrity of the document.
The role of vouchers in accounting
A voucher, in a broader accounting context, is a document utilized by a company’s accounts payable department. This document serves as a comprehensive repository for all supporting documents necessary to approve and track the payment of a liability. Whether for accounts payable, invoicing, or payroll, a voucher is essentially the backup documentation that ensures every payment is properly authorized, and the goods or services purchased are received.
Who uses voucher checks?
Voucher checks find primary usage in a company’s payroll department, often being specifically referred to as payroll checks. The voucher accompanying these checks includes critical information such as the voucher number, payee name, date, amounts (both gross and net, including any deductions), signatures, and any relevant memo notes. Despite the increasing prevalence of direct deposit as a method for paying employees, maintaining a paper trail through voucher checks remains a common and prudent practice.
Vendors and voucher checks
Beyond payroll, vendors also utilize voucher checks in specific scenarios. A voucher check is issued when an invoice is matched with a purchase order and accompanying documentation proving the fulfillment of the order. For the accounts payable department, having a comprehensive file of voucher records related to payments to vendors proves beneficial. It aids in resolving payment disputes and streamlines the preparation of books for internal month-end closings.
Frequently asked questions
Are voucher checks still relevant in the age of digital payments?
Yes, while digital payments are increasingly popular, voucher checks remain relevant for businesses seeking a tangible and comprehensive record-keeping method.
How do voucher checks contribute to internal accounting control?
Voucher checks serve as an internal control mechanism by ensuring every payment is properly authorized, and the corresponding goods or services are received, enhancing accountability in financial transactions.
Can voucher checks be used for transactions other than payroll?
Absolutely. Voucher checks are versatile and can be used for various transactions, especially in scenarios where a detailed audit trail is crucial, such as vendor payments.
Are there any alternatives to voucher checks for businesses?
Yes, businesses can explore alternatives like digital vouchers and electronic record-keeping systems. However, the choice depends on the specific needs and preferences of the business.
How do voucher checks benefit vendors in the payment process?
Voucher checks benefit vendors by providing a clear record when matching invoices with purchase orders and documentation, aiding in payment dispute resolution and contributing to a streamlined month-end closing process.
Key takeaways
- Voucher checks create detailed payment records.
- They serve as an audit trail for transactions.
- Commonly used in payroll for comprehensive record-keeping.
- Vendors benefit from voucher checks in resolving payment disputes.
- Voucher checks contribute to internal accounting control.
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