If your business accepts payments from customers or clients in cash, a cash receipt must be an integral part of your daily affairs. Keeping track of revenue, expenditure, and profit is critical for maintaining a business’ financial health. A cash receipt is a document that serves as the record of a transaction; hence, crucial for a business’ bookkeeping and accounting processes.
Each customer that deals with your business needs a receipt for their records. You need the cash receipt for calculating the total sales of your business in a period. A cash receipt template allows you to significantly reduce the time that goes into creating cash receipts manually and ensure the standardisation of processes.
What is a Cash Receipt?
A cash receipt is a document that records and acknowledges that something of a specific value has changed hands between two parties, usually from a business to a buyer. It can also be issued from one company to another in case of some transactions.
When a company receives cash payments from its customers, it is obligated to acknowledge the same in the form of a cash receipt. As a business, you need to record the incoming cash for various purposes, including accounting records and tax filing. A cash receipt is a tool that helps you do that most efficiently. It is issued by an authorised person and contains all details of the payment.
A cash receipt can be just a rough statement written by hand, but using cash receipt templates is how a business maintains professionalism. Since no electronic evidence is available for cash transactions, a cash receipt is the only way to record the transfer of funds. There are two copies made of a cash receipt- one for the customer and the other kept by the business for tracking the rendered sale. If the payment is for a tax-deductible purchase, the customer can utilise the cash receipt to itemise tax deductions.
Why is a Cash Receipt required?
A transaction between a business and its customer does not end with the exchange of cash or payment. The recording of each transaction is just as important, if not more. Utilising resources to create cash receipts manually while dealing with each customer can be highly counterproductive for a business.
For a business’ smooth functioning, it is essential to create and provide as much documentation as possible of a transaction to both parties. This documentation is how you can avoid potential legal problems or and deal with them efficiently.
A cash receipt contains all essential details of a transaction, including date, items, payment amount, name of the customer, mode of payment, etc. If you are a registered business, you likely have to collect sales tax or GST from the customers. You must add this amount to the cash receipt as well. With such a detailed description of all details, cash receipts allow you to go back to any transaction whenever required.
Cash receipts are beneficial for both the business as well as the customer. Some of these benefits are:
- Proof of ownership of the product bought for the customer.
- Hassle-free return and exchange processes for the business and the customer.
- Highly useful for the company in case a warranty claim arises.
- It helps keep complete accounting records and make tax filing easier.
With cash receipts in place, it becomes elementary for a business to stay organised. These receipts make it easier for a company to record all transactions correctly. Irrespective of the size of a business, cash receipts serve as a helpful document and allow to identify a customer returning with a concern quickly. It enables hassle-free resolution of your customers and thus helps you offer a satisfying customer experience.
What should you include in a Cash Receipt?
A cash receipt is only as helpful as the amount of information detailed in it. Generating cash receipts for each transaction helps a business keep their accounting books up to date and deal with all kinds of situations that may arise. Although a cash receipt with minimal information will rid a company of its obligation, it will defeat the purpose.
A cash receipt is a commercial document that acts as proof of a transaction. Hence, it should include all the essential information. Here are all the elements your cash receipts should consist of, to avoid any legal and operational hassles:
- The date of payment
A cash receipt should reflect the date on which the customer has paid. It enables finding a particular transaction whenever necessary.
- Receipt number
The business should assign each receipt a unique receipt number. With the help of this, the customer and the company can keep a record of the purchase.
- Payer’s information
The invoice should specify the individual that makes the payment. It helps avoid all confusion, especially for businesses that sell to other companies.
- Payment amount
The amount paid by the customer should be included in the receipt, in words and numbers. If there is some amount that remains due, the invoice should mention so.
- Payment purpose
The invoice should specify the purpose of the payment made. In case of a product purchase, the product should be listed, with all its details.
- Payee’s details
It should also include all details related to the payee. The payee should also sign the receipt to ensure accountability.
If your business collects taxes from customers, ensure that the invoice lists them, besides the cost of the product. Doing so ensures transparency in the process.
With myBillBook’s customisable cash receipt templates, you get formats with specific sections for all these details. Using these templates allow you to ensure hassle-free billing.
FAQ about Cash Receipt
1. When should a cash receipt be issued?
Ans: A cash receipt should be generated every time a customer purchases something from your company. It is due as soon as the customer makes the payment.
2. What is the difference between a cash receipt and an invoice?
Ans: An invoice is a document issued before payment. It communicates the amount needed to be paid. However, a cash receipt is given after the payment has been made. It serves as proof of a transaction between two parties.
3. Why should I use a cash receipt template?
Ans: A cash receipt template makes your billing process more manageable and allows you to save time. myBillBook offers completely customisable cash receipt templates that cater to all your billing needs.