Definition
A voucher check, also known as a remittance advice, is a financial document that combines a check and a voucher. This combination provides both the payment and detailed information about the transaction.
The voucher section typically itemizes the reasons for the payment, such as which invoices are being paid, and may contain other pertinent details about the transaction.
How Voucher Checks Work
Voucher checks serve a dual purpose:
- Payment Instrument: They function like a traditional check, enabling the transfer of funds from payer to payee.
- Information Document: They include a detailed breakdown of the payment, similar to an invoice, ensuring clarity for accounting and record-keeping purposes.
Types of Voucher Checks
- Detached Voucher Check: The voucher is detachable and can be retained by the payee for record-keeping after the check is processed.
- Non-Detached Voucher Check: The voucher part remains with the check, offering a full transaction record to both payer and payee upon clearance.
Benefits of Voucher Checks
Enhanced Transparency
Voucher checks provide comprehensive transaction details, minimizing confusion and disputes over payments.
Improved Record-Keeping
Combining the payment and voucher streamlines the bookkeeping process, making it easier for businesses to track and reconcile payments.
Efficiency in Payments
Voucher checks reduce the need for separate documents (invoices, receipts, etc.), simplifying financial workflows and saving time.
Examples of Voucher Check Usage
- Business to Business (B2B) Transactions: Companies often use voucher checks to pay suppliers, detailing purchase orders and invoices.
- Payroll: Employers may use voucher checks to pay employees, including salary breakdowns, tax deductions, and net pay information.
- Utility Payments: Utility companies may issue voucher checks to pay contractors, indicating specific services provided and related costs.
Historical Context
Voucher checks have evolved from traditional paper checks and remittance advices to digital forms in modern times. With advancements in financial technology, they have shifted towards electronic formats, offering greater security and convenience.
Applicability in Various Financial Contexts
Corporate Finance
- Accounts Payable: Voucher checks streamline the management of outgoing payments to suppliers, ensuring accuracy and timeliness.
- Internal Audits: The detailed information aids internal audits by providing clear records of financial transactions.
Personal Finance
- Household Budgeting: Individuals use them for large payments such as home repairs, enabling better tracking of expenses.
- Tax Preparation: The documentation can support deductions and other tax-related claims.
Related Terms
- Remittance Advice: A document sent by a payer to a payee, detailing the reasons for a payment.
- Check: A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.
- Invoice: A document issued by a seller to a buyer, itemizing products or services provided and their costs.
FAQs
What information is typically included in a voucher check?
Are voucher checks still commonly used?
How do voucher checks benefit small businesses?
References
- Accounting Principles by Weygandt, Kimmel, and Kieso.
- Financial Accounting by Robert Libby, Patricia Libby, and Frank Hodge.
- Practical Accounting Fundamentals by Author X.
Summary
Voucher checks, or remittance advices, are versatile financial instruments that combine the functions of a traditional check with detailed transaction information. They enhance transparency, improve record-keeping, and bring efficiency to various financial transactions in both corporate and personal finance contexts.
