Definition
A voucher check is a type of check that includes a detachable document or stub, known as a voucher, detailing the purpose of the check or the items it should be applied to. It serves as a guide for the entity receiving the payment. It also provides a record and a detailed audit trail for the one issuing the payment.
Phonetic
The phonetic pronunciation of “Voucher Check” is: “vow-cher chek”.
Key Takeaways
- Voucher checks serve a dual function; they not only operate as standard checks but also provide detailed information about the reason for the payment. It’s an efficient accounting tool for record keeping.
- They are typically used in payroll to provide details about the earnings and deductions of an employee. Apart from payroll, they could be used in situations where explicit records of payments are necessary, such as rent or utility bills.
- For security reasons, Voucher checks often contain advanced security measures like watermarks or chemical reactive paper to prevent fraud or replication. This makes voucher checks a reliable choice for the businesses.
Importance
A voucher check plays a crucial role in business and finance management as it delivers a high level of control and accountability over financial transactions. This type of check is attached to a document detailing the purpose of the expenditure, such as what was purchased, from who, and for how much. It aids in ensuring that expenses are approved and recorded correctly, which helps in providing an accurate financial status of the business. Furthermore, voucher checks also contribute to preventing financial misconduct such as embezzlement or accidental double payments, acting as an efficient internal control mechanism. Therefore, maintaining the use of voucher checks is crucial for financial transparency, accountability, and integrity within an organization.
Explanation
A voucher check is an essential business tool commonly used for disbursement of money in a business setting. The key purpose is to enhance a company’s financial control and accounting processes. This particular type of check has two parts—the main check portion and an attached stub or document known as a voucher, providing detailed information about the purpose of the payment. The voucher includes vital details such as money amounts, account numbers, invoice specifics, and the payee’s information. The use of a voucher check becomes a standard procedure in businesses as it serves as tangible proof for tracking all payments and expenditure, making it an efficient way to maintain transparent financial records. This method of payment helps to reduce the occurrence of fraud or misuse of company funds because it offers a clear audit trail. Moreover, voucher checks are especially used when a company needs to pay a supplier or vendor via a mailed check since the accompanying voucher explains the purpose and breakdown of the payment. Therefore, voucher checks significantly contribute to enhancing financial accuracy, transparency, and accountability in a business.
Examples
1. Employee Reimbursement: One of the most common uses of voucher checks in business settings is for employee expense reimbursement. Suppose an employee travels for a business trip and has to pay for food, lodging, and other costs out of pocket. Once the trip is over, the employee gives all the receipts to the employer. The employer, after verifying the expenses, issues a voucher check detailing each expense and the total amount reimbursed.2. Vendor Payments: A business that purchases goods or services from a vendor can use a voucher check to make a payment. For example, a retail store orders inventory from a supplier. Along with the physical items, the supplier sends an invoice listing each item’s price. The store can draw up a voucher check showing all the business items listed on the invoice, the total payment to the vendor, and possibly even a note about when the next order will be placed.3. Utility Payments: Businesses also use voucher checks to pay their monthly utilities such as electricity, water, and internet. In this case, the check is made out to the utility company, and the voucher part of the check details the utility, the period the bill covers, the total amount due, and possibly the account number. This allows for easy tracking and record-keeping of business expenses.
Frequently Asked Questions(FAQ)
What is a voucher check?
A voucher check is a type of check that’s attached to a stub or voucher, providing detailed information about the reason for the payment, the payee, the date, and other relevant data.
Why are voucher checks used in businesses?
Businesses use voucher checks to maintain detailed records of their payments. The voucher portion provides a reference that aids in the management of financial transactions, and it simplifies the process of tracking expenses for accounting purposes.
Can voucher checks be used like regular checks?
Yes, the check portion of a voucher check can be used just like any other check. The main difference lies in the additional information provided on the voucher stub.
How does a voucher check enhance financial security and accountability?
Voucher checks provide an added level of security and accountability by recording detailed information about each payment, such as the purpose of the payment, the payee and approval signatures. This makes it harder for fraudulent activities to occur.
What is included in the detail section of a voucher check?
The detail section of a voucher check typically includes the payee’s name, the date of the check, the check number, the payment amount, the reason for the payment, approval signatures, and any other relevant information.
Can voucher checks be used in the digital era?
Yes, voucher checks can still be used even in the digital era. There are software programs that can print voucher checks, allowing the continuation of their use. However, many businesses have switched to electronic payment methods, such as direct deposit and wire transfers, which often include similar detailed information as a voucher check.
Are voucher checks commonly used for payroll?
Yes, voucher checks are commonly used for payroll because they provide both the employee and the employer a detailed record of the payment, including the date, the amount, any deductions or additions, and approval signatures.
How does one fill out a voucher check?
When filling out a voucher check, you write the payee’s name, date, and payment amount on the check portion. On the voucher portion, you write additional information about the payment, such as the reason for the payment and any other necessary details. It is important to ensure that the information on both sections accurately corresponds.
Can I reorder the voucher checks from my bank?
Yes, most banks provide the service to reorder voucher checks. However, the requirement and cost vary from bank to bank. Ensure to contact your specific bank for more detailed information.
Related Finance Terms
- Accounts Payable
- Payment Authorization
- Bank Reconciliation
- Double-Entry Bookkeeping
- Internal Control
Sources for More Information
