Are you a beginner and just figuring out the meaning of a cash receipt or you probably want proof whenever you make a payment, then this article is for you.
I know many of us, have already said no to not needing a receipt after a payment, but we forget how important that piece of paper can be. It can prevent disagreements, misunderstandings and more. Basically, it simplifies your life when it comes to any exchange of money and keeping track of expenses.
So, look no further, let’s take you on a simple and easy read of the importance of cash receipts. And an added bonus, we have sneaked in an easy and free to download and modifiable cash receipt template word.
You’ll be surprised of how many disagreements it can prevent.
What is a cash receipt?
A cash receipt is acknowledged when an exchange of cash for a product or service is made. There is the individual who pays and then, there is the latter or business who receives the cash from a customer, investors or bank. Its use is to serve as proof of any transaction or payment. The original is given to the buyer and the copy is kept by the seller.
There are different forms of payment, of course, when a company accepts to take payment on credit by expecting to accept the cash at a later date or as soon as the product or service has been exchanged known as cash sale.
However, regardless of the date and time or type of sale transaction, when a customer or a client gives cash or a check to a company or an individual, a cash receipt is provided for the former.
What are the sources of cash receipt?
The cash receipt is used to record every transaction regarding the reception of cash by a party from the other, whether it be from sales, receipt of bank loans or sales of other assets and more. However, the major sources include:
- Capital investment by the owner,
- cash sales,
- selling of an asset for cash,
- collecting cash from customers,
- collecting cash from interest, dividends, rent, etc.,
- loan from someone, bank, financial institution.
What are the types of cash receipt?
Cash receipts can be divided into 3 categories that are the:
1. Receipt of cash from sales
It is all cash received from the selling of goods and services in cash to customers and clients. It is recorded in a cash receipts journal and mentions the name of the buyer.
2. Receipt of Cash from Credit Customers
The cash that has been received after crediting the customer, i.e., the customer, buyer.
3. Receipt of Cash from Other Sources
It is the cash that has been received from any other sources, such as the banks, sales of non-inventory assets and more.
How to write a cash receipt?
Depending on the company’s preferences, different formats of cash receipt exist and are used for a cash receipt. If you are hesitant, Appvizer has created a nice cash receipt template word design for you. It will be easy to fill in and you can download it here:
Now here is an example of how to make a cash receipt:
1. The cash payment receipt
You can click on our model, download it on Word, print it out or save it in your file. But, you’ll need to know how it works first.
2. Introduce the payment recipient as the person who issues the receipt
When a person issues the receipt, they should identify themselves as the onset of this receipt. You’ll start by filling in the name of the contractor or company, followed by the contact details, the mailing address sometimes labeled as street address, the ZIP code, telephone number, fax, etc.
3. Create the documentation for this cash payment
It shall be created to prove to the client that payment was made by inserting the time, date, year of course.
Then, you enter the receipt’s number written like this: Receipt #: 5558 then finish it off by filling in the “Paid by” with the person’s name.
The payment amount ensues, you write it entirely spelled out, and the value numerically in dollars right next to it.
5. Cash received
This part is where you break down the payment that was owed. It includes everything from the subtotal, tax rate, total tax, total amount due, amount paid, remaining balance. All of that information would of course be in dollars for the US. It is reproduced from the customer’s or client’s payment invoice.
Format of cash receipt
- The date on which the transaction occurred,
- the unique number assigned to the document for identification,
- the customer’s name,
- the amount of cash received,
- the method of payment, i.e., by cash, check, etc.,
- the signature of the vendor.
Example of a cash receipt
You are a wholesaler selling furniture to customers. One, in particular, is interested in making a purchase and because you do not to lose that sale, you jump quickly on the opportunity. You look to give the customer what he wants, explain to them about what the goods can do, what are the benefits and make it appear like if they do not buy it now, there might be another one like it.
So, the payment stage has come, congratulations, you have shown great salesmanship. The customer is about to take out their cash and is ready to purchase. So, you, as the seller, prepare a cash receipt to give to the customer. You start filling their name, the amount or total and the whether it is dollars or any other currency. The number that identifies the document, as previously mentioned above.
And then, finally, it is time for the signatures. The seller generally keeps a copy and gives the other to the buyer as proof.
Finally, a cash receipt is of an important measure when transactions take place. One party can’t say that they were not paid, and the other won’t have to say they already did. Each party involved can get to keep the documents that include the date, time and signatures for the transaction.
And plus, if you were to take every receipt you have, you’ll be able to keep track of all your expenses on your own, that is if you don’t spend too much now.
Good luck with your future transactions!