. . . .
. . . . . . . .
. . . .. .. .. . .
. . text . .

The chequebook is an important source document for recording expenditure. While it is probably not the only source of outgoings for your organisation (such as Direct Debits, Bank Fees and Charges, Credit cards and B-Pay) it is the most often used. Furthermore, the usefulness of the chequebook to give you information about your organisation's expenditure relies on the details, which are recorded on the cheque butt.

If you operate more than one cheque account, write the account name on the front of the chequebook. Also write the date range (or cheque number range) on the front of the chequebook. (Some people find it helpful to sequentially number the chequebooks - 1, 2, 3, - on the front as well.)

It is good practice to only write cheques where there is a source document. In most cases this will be an invoice, but it may also be against documentation which represents, say, replenishment of petty cash or reimbursement of out of pocket expenses by staff, where the invoices or receipts are secondary (ie. the cheque is not made out to the supplier directly, but there is documentation which can justify the expense.)

It is important to understand the implications of paying invoices, and the effect of the GST. (If you are a not-for-profit, and not familiar at all with the GST and what it means for your organisation, go here.) In essence, in order for your organisation to be able to claim back the GST, which is included in the price of the goods or services, for which the invoice is issued, the invoice must contain certain information.

The ChequeBook and Bank Statements are filed here. (However if security in your office is such that it would be unsafe to leave the chequebook in this file, ensure that it is secured elsewhere.)

Go through the process of identifying which invoices to pay. Ensure that the goods or services were ordered by an authorised person in your organisation, and delivered as required. Avoid paying in advance for anything, and where a deposit is required, take time to understand the consequences of not being able to complete the acquisition.

When you write the cheque for the Invoice, record the following information:

  • On the Invoice, write the cheque number, the date and the amount, if different than the total on the invoice.
  • On the cheque butt, write the date, the supplier and the amount, record the invoice number, the purpose of the acquisition, and the amount of GST paid. (This can be recorded on the back of the previous cheque butt.) It is not necessary to record all these details on the cheque butt if you intend to write up the transaction immediately into the cash payments book, however this can save time if you intend to write up a number of cheques at once.

    Suppliers will often send Statements of Account, detailing the purchases and payments, which have occurred since the last Statement. It is very important that you do not make payments against Statements but only against Invoices. The Tax Invoice is the Source Document upon which you can claim your input tax credit. Also, you increase the risk of duplicating payments and getting confused about which suppliers are unpaid. You should develop a strict agency policy to only pay on presentation of an original Tax Invoice.

    On a regular basis, and no longer than fortnightly, transfer the details from your ChequeBook to the Cash Payments book. (For a template of a page from a Cash Payments book, go here.)

  • Bank Statements

    Your Bank Statement is the heart of your financial reporting system. This is because it is the external validation of your income and expenditure transactions. Auditors rely on bank statements to validate the transactions you report that your organisation made. The Bank Statement also lets you keep track of your current bank balance, and thereby avoid overdrawing your account and attracting unnecessary fees or bouncing cheques.

    To ensure your records match those of the bank, it is advisable to reconcile your bank statements periodically and at least each month.

    To reconcile your bank statement, you need to mark off the statement all those entries in your cashbook. To ascertain your actual balance, you need to add to the Statement balance any deposits not yet cleared, and deduct any cheques, which you have written but have not yet been presented. You also need to allow for any direct debits and credits you have organised, and charges, which appear regularly on your Statement.

    Once you have marked off all the entries on the Bank Statement, you can transfer this document to one of the lever arch files, marked Bank Statements (Account Nº from ... to ...).

    . .
    . . . . . . . .
    . . . . .
    . .
    . . . . . .Updated: Sun, 29 Apr 2001 . .