Payment vouchers and document classification: when do you actually raise one?

Hook

Boss, has your company ever raised a payment voucher? Some people raise one for every single payment and wear themselves out. Others never raise one at all, so the money leaves and nobody can say why. Today we settle it: when a payment voucher is needed, how documents are classified, and what double entry actually means.

When you need a voucher

The principle in one line: where a payment has a document, the document is the evidence; only where there is none does a voucher have to stand in. A supplier gives you an invoice and a receipt — pay against the document and you are done. But in these situations you raise a payment voucher: reimbursing a staff member, returning money the boss fronted, paying a commission, paying a deposit, paying a small trader or an odd-job worker who does not issue bills. Money has left, so there has to be a piece of paper saying who it went to, how much, what for, and who approved it. A voucher is not for the government's benefit. It is for yours — the "clear for yourself" from the first lesson.

Cash bill or credit bill?

Plenty of people get the classification wrong. It is decided by when you pay. A cash bill is settled on the spot. Buy something at AEON or Mr DIY and you cannot walk out until you have paid — and it makes no difference whether you paid cash, by bank transfer, with Touch 'n Go, or with a debit or credit card. As far as the business is concerned that is a cash purchase, settled there and then. A credit bill means you take the goods first and pay later. The supplier gives you terms, and you settle against the statement at month end — that is buying on credit, and it goes through the supplier account. Note this carefully: swiping a credit card is not a credit bill. The shop received its money on the spot; what you owe is between you and the bank. Keep the card slip, because that is your proof of payment.

Double entry: through the supplier account or not?

You have heard of double entry — every transaction has a debit and a credit, and the two sides balance. Settled on the spot: Dr expense, Cr bank. One step, no detour through the supplier account. On credit: first Dr expense, Cr supplier; then on payment, Dr supplier, Cr bank. Two steps, and how much you owe each supplier is visible at any time. The rule is simple: settled on the spot, post it straight; given terms, run it through the account.

The clever use of contact records

So does a cash purchase mean the supplier does not need recording? No — and this is where contact management earns its keep. In the system, a cash bill can still carry a contact: you are not recording it as credit, but you are recording who you bought from. Pull a report at year end and you can see exactly how much you spent at the same hardware shop, with the same supplier, over the year. Negotiating an annual discount, comparing prices, changing supplier — every one of those now has a number behind it. The last lesson covered receivables and payables, which is managing what is owed. This is managing what is bought. Contacts serve both sides.

To close

Need to raise payment vouchers? You do not have to buy a system for it — LTT built a free voucher tool: put in the payee and the amount and print it or save it as a PDF. Go to free.lttcfo.ai and look for Payment Voucher. Coming next: businesses that carry stock — how inventory is valued, perpetual or periodic, and tracking by SKU, in one lesson. I am LTT, helping SME bosses get their accounts straight. Follow us, and see you next time.