Voucher Vs. Invoice: The Ultimate Comparision for Small Businesses

What is a Voucher?

A voucher is a written record that confirms the precision of the transaction’s accounting and the passing accounting entries made in the account books. It falls under the category of redeemable transaction bonds that have specific uses.

Businesses create a voucher once they have a supplier’s invoice in hand. A cheque or digital payment sent to a supplier must be marked as “paid” and stored alongside any related paperwork after being sent.

Payment vouchers are used by account payable systems to produce a payment that matches outstanding vouchers. A correction to an account in accounts receivable may be made using the voucher.

A business can need to buy raw materials or inventories from suppliers to utilize in the production of the firm’s products. The suppliers essentially provide the business an extension of credit, allowing for speedy payment, such as in 30, 60, or 90 days.

A few advantages of keeping vouchers are as follows:

• Vouchers are helpful to maintain more significant control over the payables process.
• The number of checks needed can be decreased by paying many bills at once.
• It makes the payables audit trail simpler and maybe pre-numbered.
• For both increased productivity and ease of planning, invoice approval, and payment are kept separate.

To produce a voucher, some defined steps are used. The following are the simple steps used:

• A supplier is given a product or service order.
• The supplier recognizes, accepts, and confirms the order.
• The authorized person attests that the goods and services are in line with the provisions of the contract or agreement.
• It contains all relevant and related information about the transaction and accounts.
• Before completing the payment, the organization thoroughly reviews the voucher and the required source documents.

Format of Voucher

It serves as a supporting document in manual payment methods, where it is most often seen. A coupon often contains the following information:

• Date and types of accounting vouchers
• Credit and debit column
• Details column including a brief description of transaction record
• Supplier identification number
• The amount due
• Date when funds are to be transferred
• Accounts Payable records the liability
• Any real savings for paying in advance
• Name of the liability account
• The approving stamp or signature

What is an Invoice?

A statement that the seller provides to the customer in return for payment is called an invoice. If an invoice includes the names of the buyer and seller, the sort and cost of the products or services, and the terms of payment, it may also be used as legal documentation.

Invoices are more than simply a formal record containing the complete details needed to request compensation from clients. They could assist you in maintaining organization and projecting a professional image when you submit your taxes.

You may ensure that each amount is authorized and that you obtain the purchased products by issuing vouchers. It provides a solid internal control structure. They are quite useful in audits as well. They provide evidence for the transactions included in the financial statements.

Maintaining vouchers is essential for the correct and effective running of any organization’s revenue process. It is utilized in the same way throughout an audit’s verification process as proof in any legal case. The primary explanations for why invoices are required are as follows:

• Helps ensure accurate accounting
• Gives defense in court
• Makes tax preparation simpler
• Assistance with business analysis
• Maintains orderly inventory records

Format of Invoice

Different items may need to be included in your invoices for documentary evidence depending on the industry you work in, local legislation, and the type of work you do. The following, however, every invoice includes complete details like

• The word “Invoice” and the particular invoice number written on it.
• Contact number, address, and supplier name
• Dates of the delivery
• Description of the products supplied and their quantity, cost per unit, and total cost
• The total amount charged, including tax information
• Pay terms and procedures
• The quantity on a purchase order
• Conditions for late fees, revenue processing fees, and exchanges or returns of purchased products

Types of Vouchers

Numerous types of accounting vouchers exist, depending on the nature, requirements, and convenience of the firm. Following are the various types of vouchers:

Receipt Voucher

It is a type of voucher that can be used to log bank or cash transactions. It has two categories: Cash receipt vouchers and Bank receipt vouchers. A cash receipt voucher is created for the cash earned.

Payment Voucher

Payment vouchers demonstrate the transactions with an outflow of funds. It is used to keep track of all bank and cash transactions inside the company.

Transfer Voucher

It is used for deals that does not include cash, banking, or the inflow or outflow of cash. They act as verifiable documentary proof of the deal.

Sales Voucher

All services and goods purchased are processed through a sales voucher. The sales voucher is created to record both credit and cash sales made by a particular company. The relevant debtor charge is debited, while the accompanying sales charge is credited.

Purchase Voucher

A buy voucher serves as the record of a sale transaction involving the services and goods purchased inside an organization. The payment options are cash, credit, or a bank account. The appropriate provider receives credit when a transaction is made on credit.

Supporting Voucher

Each transaction that has ever occurred inside the organization is supported by a supporting voucher. Supporting vouchers are a log or documented account of all the transactions within the organization. For instance, to support the primary voucher, supplementary vouchers are attached to the expenditure bill. Supporting vouchers can be divided into two:

• Internal Vouchers: It is created by the company but approved by third parties like banks.
• External Vouchers: It is generated in the form of bills, cash, etc., and sent to the company.

Differences Between Vouchers and Invoices

The following points outline the distinctions between the two:

Conclusion

Without the invoice and vouchers, there will be no record of the transactions that transpired. Thus, these documents offer a robust and organized framework for maintaining accounting records. As a result, they must be prepared and maintained with care. Accounting vouchers are created by every firm since they are essential for tracking a company’s income and spending and assuring compliance with legal duties.

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