Have you experienced issuing a check and then you forget about it? Couple of days later, the bank calls you to report a bounced check. Did you feel humiliated that your check has no sufficient fund? Were you worried that the supplier may not deliver or take legal action against you?
Bouncing check is punishable by law. I’m sure you don’t want to expose yourself with such legal risk. That’s why instead of relying on your memory to remember all business check issuances, why not use an effective system of monitoring check issuances called “Check Voucher System”.
What is a Check Voucher?
A check voucher is a document recording and filing system used in accounting to record, monitor and organise check issuances of the business.
Benefits of a Check Voucher
Whenever we have a new client, we make it a point to recommend to use vouching system, including check voucher. However, some will view it as tedious and time-consuming.
For an instance, a particular client was reluctant to use check voucher system because the business is just starting, small in size, and have few transactions. Three years later, the business grew and transactions increased tremendously. It became harder to monitor and organise their business check payments that’s why we recommended again to use check voucher, however, it was still denied. The client said the business work well without it. But years later, the client had issues with disorganised suppliers documents, unmonitored payments to suppliers, bouncing checks, double check payments, and theft. It became difficult to investigate and track back without the vouching system. After such incident, the client saw the importance of check voucher and prioritised establishing vouching system.
It may seem tedious and time consuming to maintain a check voucher system, but let me tell you the benefits:
1. Completeness of Transaction Documents
The check voucher system begins with getting all relevant documents to support and prove the transaction such as: vendor’s invoices, purchase orders, purchase requisition, deliver receipt, etc. All these will then be attached to the check voucher for processing of payment.
2. Sequential and Organised Filing
Check vouchers are pre-numbered in sequential order starting from 001. This is important to make sure there are no irregularities and maintain completeness of records.
3. Efficient Bookkeeping
Having a check voucher makes bookkeeping easier because the documents needed are already available, valid, and intact. Also, if check voucher are computerised, once check voucher is prepared, an accounting entry is also recorded.
4. Lesser Internal Review and Audit
Lack of control, such as check voucher, can result to disorganised documents which results to increased errors. With more errors, the higher the need for review and audit which then results to costly and inefficient business operation.
Having check voucher provides enough control to make internal review and audit less necessary.
5. Easy Monitoring of Outstanding and Cleared Checks
An organised check voucher system makes it easier to monitor checks that are cleared (paid) and are still outstanding (unpaid). Normally, check vouchers that are still unpaid are not yet filed in the check voucher folder, while paid check vouchers are filed.
When to use a Check Voucher?
In general, checks are often used to pay high amount and recurring purchases or expenses. It is also used to pay instalments or monthly payments such as rent, loan, mortgage, etc.
A check voucher is used every time there is a check issued or used.
How to use a Check Voucher?
A check voucher is relatively easy to do and prepare, below are some of the fundamental steps:
1. Gather and review all relevant purchase documents and information
Before you prepare a check and a check voucher, make sure that you have all the important documents, if applicable, such as: vendor’s invoice or statement of account, contracts, delivery receipt, purchase requisition, purchase order, etc.
Check and review if the following information are provided in the documents: name of the vendor/payee, document reference number, date of the document, due date of payment, terms of payment, details of the purchase, amount to be paid, total amount of purchase and equivalent taxes.
2. Prepare the Check and Check Voucher
Depending on your bank, preparation of check and check voucher can be manual or computerised. But this article will explain the manually prepared check voucher.
For manual process, once you have the reviewed documents in step 1, you may proceed writing a check. Important items written in the check are: Date/Payee Name/ Amount in words and figure
Next, prepare the check voucher using the documents in step 1 and the written check. Important items written in the check voucher are: voucher number, date of the voucher, check number, check date, bank name, amount of the check, total amount of purchase, relevant taxes such as value added tax and withholding tax, document reference number, due date, details of the purchase, and accounting entries.
Remember that check voucher should be in sequential order.
3. Attach the Documents and the Check in the Check Voucher
Once the check voucher is prepared and printed, make sure that the documents in step 1 and the check in step 2 are attached or grouped. All of these will be needed in the next step.
4. Submit the Check Voucher for Approval
If the signatory (or the owner) is the one preparing the check voucher, you may skip this step. Simply sign the check and the check voucher. Then proceed to step 5.
If you’re the preparer, submit the check voucher, together with attached check and documents, to the owner or authorised signatory, for review and approval. Once approved, owner or signatory should sign the check and the check voucher.
5. Release the Check to Payee/Vendor. Have the Check Voucher Signed
Once you have the approved and signed check voucher, with attached check and documents, you may now release the check to the payee or vendor. Make sure to ask them to acknowledge receipt of the check by writing their printed full name, date received and signature in the check voucher.
For Philippine tax compliances, make sure to follow-up your payee or vendor’s Official Receipt (if service) or Collection Receipt (if goods), as proof of payment once the check clears and payment is confirmed.
6. File the check voucher with attached documents in the filing folder
Last but definitely an important step is proper filing. Once the check has cleared and payment has been successful, you can now file the check voucher with attached documents in the check voucher folder.
But do take note that until you receive a confirmation that the check is cleared, and payment has been successful, keep the check voucher in outstanding check folder or tray. Do not file it yet in the check voucher folder so that you can monitor to ensure the check is funded, to avoid bouncing check. Once the check has cleared and payment has been successful, you can now file the check voucher.
Arrange the check vouchers in sequential order for easy checking and reference in the future.
I hope this article have been helpful. Please feel free to leave a comment for your questions or clarifications.
