Receipting

What is receipting?

Receipting is the method for recording received cash for any product or service in any business or non business entity. Everyone has received a receipt print in their daily life as an acknowledgment for any payment they have done. Normally we called as “Cashier” for the receipt issuer. For small size shops and businesses which calculate daily revenue on cash basis, receipt is the main source to count their revenue, because they are not recording the income in standard & formal way. Receipt is a kind of a confirmation given by the receipted party to paid party. This has a legal value too. It is the main evidence that you can present at any dispute, reimbursement, confirmation etc.

Evolution of Receipting

Ancients have used many systems to confirm their receipts during the barter system (Where people did not used money & exchanged their goods) and before that era, but there wasn’t a formal way and most of times it couldn’t confirm in front of any occasion. However we can surely say formal receipting started after the invention of paper after AD 105 & with the end of barter system. Initially this was written by hand in the paper with the required details & this has changed in the past centuries now it has become virtual as everything. Now the receipt is not physically issued.

Types of receipting

There is no standard method for receipting, but we can categorized this like this, Printed/manual or Direct revenue receipt/Miscellaneous income receipt

• Printed Receipt                

Most entities are issuing the printed receipts, since in current world majority of the businesses is using an accounting system. There are lot of advantages using systemized receipt, such as formality, no need of rubber seal or signatures and good reputation etc.

• Manual Receipt                

Manual receipts are using the entities which have not accounting system or in a time of absence of an accounting system. Cashier or officer will write the amount/date and description by hand and will sign in the bottom.

• Direct Revenue Receipt                

This is the most common method for receipting in current world. Most of the business and entities have an accounting system and they print their receipts to customer or payers via the system.

• Miscellaneous Receipt 

Apart from the main revenue stream, most of the businesses has to report miscellaneous income such as selling used assets, brokering fees, Prize wins etc.

Journal Entry for Direct Receipt (Main Receipting)

In this scenario you have already booked receivable in other asset ledger. Normally systems generate the receivable at the time of invoice issuing in the system. Same time it credits to the income debit to the receivable ledger.

Cash/Bank Ledger           Dr

Receivable Ledger           Cr

Journal Entry for Miscellaneous Receipt

In this scenario you have to create the receivable manually first, because this is kind of an ad-hoc receipting & this does not happen in the day to day process.

•       Creating Receivable

Miscellaneous Receivable Ledger             Dr

Other Income Ledger                             Cr

 

•     Receipting

Cash/Bank Ledger                                  Dr

Miscellaneous Receivable Ledger              Cr

Process of Receipting

Most of the entities have a separate sub department under the finance department for receipting. Process can be varying according to the business type style & mangers. But normally receipting departments follow below steps.

• Issuing invoice or notifying price to paying party (Customer)
• Receiving money via cash, card, cheque or online
• Entering details to system or manual receipt book & settling the receivable in system
• Printing the receipt
• Handing over the hard copy or soft copy to customer via possible method

New Trends in Receipting

• Direct Payment Receipting (online receipting)

Most of the businesses have given opportunity to customers to pay online without contacting or visiting to branches or locations. Company issues the receipt online in same time or later through any virtual platform.

• Robot Receipting

Companies use robot systems to receipt direct payments done by the customers. Most of the time this is done due to not supporting the system for direct online receipting.

• Virtual Receipting

Nowadays most service & product providers allow customers to online & same time system generate automatic receipt. You should have experience this in online payments.

• Receipt Format

There is no standard common format for receipt, but entity or person need to issue a simple, understandable receipt with below common details. There can be more additions based on the product and service nature and the supplier & customer requirements.

Receipt No    :Any sequence number for tracking the receipt

Date             :Receipt issuing or paid date

Payer Name   :Payer name for give the ownership

Currency       :If the company do the transaction in varies currencies, it’s                 mandatory to mention the currency

Amount         :Amount should mention at least in numbers or words. Or by both                           methods.

Description    :Should mention the why paid and any other note

Received By   :Payer should know to whom paid

Signature      :There should be a signature to be valid (If computer generated,        normally no need signature)