PNDBF – Receipts and Payments

1. PNDBF – Receipts and Payments Lim SeiKee @ cK

2. Introduction • Think about the items you normally buy with your pocket money, eg. Refreshments, stationery or reading materials. Do you keep the receipts for these items?

3. Companies make payments or reimburse staff for office expenses like stationery, transport, postage and other miscellaneous items. • Petty cash is the money that is kept in the office and used to make small payments. • The small amounts of money that are paid out to staff are called petty cash payments. • A petty cashier is in charge of handling petty cash and making petty cash payments.

4. Besides petty cash payments, there are other methods of payment made by an office, such as through bank transfer or by cheque. • It is important to have proper control and standard procedures in the handling of monies. • Ineffective handling of receipts and payments affects the operation and profitability of the organization.

5. PETTY CASH CONTROL Petty cash is used to make payments to staff for small office expenses such as foodstuff for the office pantry, transport fees or common stationery items. A system of control is necessary to prevent the misuse of the money set aside for petty cash. The petty cashier is responsible for the safekeeping of petty cash.

6. A) Staff members who have petty cash claims must fill in a Petty Cash Voucher, stating the amount of money spent, the date of expenditure and the reason for the expenditure.

7. ACE TRADING COMPANY PETTY CASH VOUCHER NO __1_____ DATE _09.07.2012___ PAY AWG SHAHRAN BIN AWG DAMIT_______ DOLLARS FIVE DOLLARS ONLY____ BEING PAYMENT OF EASI CARD______ _________ __________ __________ Prepared by Authorized by Payment received by

8. B) The receipt, a slip of paper indicating the details of the expenditure, must be attached to the Petty Cash Voucher. The petty cashier must ensure that the amount on the receipt matches the amount written on the Petty Cash Voucher.

9. c) The petty cashier makes sure that the Accountant or the Accounts Manager signs and authorizes all the claims. The person receiving payment also signs on the voucher. Therefore, the voucher is an important record of payment, especially when a receipt is unavailable.

10. D) All Petty Cash Vouchers and receipts are to be kept for recording purposes. The petty cashier is the only person responsible for the records. From time to time, the Accountant or Accounts Manager will also check the petty cash records and count the petty cash to prevent any mistakes or acts of dishonesty.

11. SAFEKEEPING OF PETTY CASH • To guard against theft: • The petty cash is kept in a cash box, which is locked and stored in a safe place. • The key to the cash box is also kept in a safe place. • Only the petty cashier has access to the cash box and key.

12. The Imprest System At the beginning of a period, eg. the week, the petty cashier receives a fixed sum of money. This is called the imprestOR float. Next, the petty cashier will make payments for expenses from the imprest. These payments must be correctly recorded in a Petty Cash Book.

13. The expenses must be totalled and the balance worked out at the end of the period. The chief cashier will then reimburse the petty cashier the total sum of money paid out from the petty cash. This will bring the imprest back to its original amount.

14. Procedure to make payments • Check the Petty Cash Vouchers against the receipts to see that the amounts match. • Enter the amounts spend in the ‘Analysis Columns’ of the Petty Cash Book under the relevant headings for expenses. Items that do not fall under any of the headings in the Petty Cash Book are to be placed under ‘Miscellaneous’, eg. Repairs or flowers for reception area.

15. 3. Check that the vouchers are authorized before making any payment. • 4. Pay the amounts to the staff concerned. They must sign the vouchers to acknowledge that payment has been made. • 5. Keep a record of the Petty Cash Vouchers.

16. TYPES OF PAYMENT We have looked at how an office handles small, internal payments. What happens when the office needs to make a payment to other local or overseas organizations? Depending on the amount and the nature of the business transaction, the office may make payment in the following ways.

17. a. Bank draft • A bank draft is a cheque drawn up by a bank and paid in the currency of the country the company wishes to make payment to. • An overseas shipment of goods or a foreign magazine subscription may be paid using a bank draft.

18. b. Cashier’s order • A cashier’s order is a cheque drawn up by a bank and is used only to make payments within a country. • As the drawer of the cheque is the bank, it is a safe means of payment for a creditor who does not accept the company’s cheque. • A cashier’s order may be used for payment of goods and services and other expenses.

19. c. Credit transfer • A company may transfer money from its bank account to another of its accounts or to another person’s or company’s bank account. This is called credit transfer. • Most companies use credit transfer for payment of employees’ salaries.

20. d. Cheque • A cheque is a written order to a bank to pay an amount of money from a person’s or company’s bank account to another person or company. • This is a common means of payment used by companies for settlement of their expenses.

21. e. Direct debiting • When the company instructs the bank to make payments from its bank account to another person’s or company’s bank account, it is called direct debiting. • The amount to be paid and the date of payment are not fixed. • Companies use direct debiting for payment of its expenses such as utility and telephone bills.

22. f. Standing order • A standing order is an order to a bank to make periodic payments of fixed amounts from the company’s current account. • This is a convenient and quick method for payment of expenses such as insurance premiums and rental.

23. PARTIES TO A CHEQUE • The company or person who makes the withdrawal by cheque is the DRAWER • The bank on which the cheque is drawn is the DRAWEE • The company or person for whom the cheque is written is the PAYEE.

25. TYPES of CHEQUES • A) Cash cheque • B) Crossed cheque • C) Post-dated cheque

26. Cash cheque A cheque that allows cash to be drawn over the bank counter is called a cash cheque. It bears the word ‘Cash’ instead of the payee’s name. The word ‘Bearer’ is not cancelled. This means that if a cash cheque is lost, anyone who finds it can obtain cash over the bank counter.

27. Crossed cheque A cheque with crossings on it is called a crossed cheque. ‘A/C Payee Only/ Not Negotiable’ is an example of a crossing marked on the front of a crossed cheque. The word ‘Bearer’ is cancelled. This means that only the payee can cash the cheque as the amount is credited to his or her account. If you are sending a cheque by post, cross it to safeguard against theft.

28. Post-dated cheque A post-dated cheque is one that is dated later than it is written. This type of cheque can only be cashed on or after the date shown on the cheque.

29. Checklist for writing a cheque @ Use a pen. In this way, details cannot be erased easily. @ Write the current date unless it is a post-dated cheque. @ Write the payee’s name and the amount to be paid correctly. @ Sign the cheque. Otherwise, the cheque cannot be processed.

30. Stopping payment on a cheque • If a cheque is lost or the drawer decides to cancel the cheque after giving it to the payee, the drawer may telephone the bank and ask for payment to be stopped. • The bank’s computer system will automatically reject payment on the cheque when it is presented for cashing.