An internal document that serves as a "memorandum" of the liabilities of a company

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What is a Voucher?

A voucher is an internal document within a company that is issued by the accounts payable (AP) department. It can be seen as a “memorandum” of the liabilities of the company, and it is used to authorize a payment.


In each company, there exists an accounts payable department that is in charge of making payments that are due to its creditors and suppliers.

A voucher is a backup document needed to initiate the procedure of collecting and filing all other documents required to settle a liability.

An important feature of the internal accounting of a company is the control mechanism. The mechanism ensures that each payment made by the company is previously authorized and that it is appropriate for the goods or services received based on the pre-existing agreements.

In other words, a voucher is a supporting document for an invoice received by the company. Once the voucher is issued, it means that the invoice’s been checked, and it’s been confirmed that it needs to be paid. The voucher authorizes the payment of the invoice in one lump-sum that will be written on the balance sheet.

How Vouchers Work

In business-to-business transactions, often the payments are not due immediately. They can be paid with an allowed delay that can vary between 30, 60, or 90 days. When the company receives the supplies with the invoice, instead of releasing the payment immediately, it creates a voucher as a reminder of the payments due or as a statement of the payment already made.

A voucher can include various supporting documents. The most common are listed below:

  • The invoice received from the supplier
  • The data of the supplier to be paid (name, address, telephone number)
  • The data for the payment (amount due, including a possible discount and due date for the payment)
  • The initial purchase order made by the company
  • The receipt that confirms that the company received the goods or the services stated in the invoice
  • The general ledger accounts – needed for accounting reasons
  • The signature of an authorized representative at the company (such as the head of the accounts payable department) that validate the purchase and the payment
  • The proof of payment, which is included in the voucher documentation

The graph below shows the process of preparing a voucher:

Voucher Process

Accounting Principle

Considering the information above, you can see that there are two types of vouchers:

  • Vouchers that have an outstanding balance due; and
  • Vouchers that refer to an invoice already paid.

The first type (payment due) is registered on the balance sheet as accounts payable. After the voucher’s been paid, it will be registered as a paid voucher, and the proof of payment must be attached.

Importance of Vouchers

Vouchers are particularly important when an audit is performed. By law, public companies are subject to an audit procedure that verifies the veracity of the information in the financial statements. Thanks to the voucher, the auditor in charge can easily verify that all the goods purchased, or the services paid, were actually received by the company. Thus, the vouchers are used to justify and document the cash payments of the company.

On the other hand, the vouchers are used internally to reduce the risk of misconduct by employees and deter them from colluding to steal company assets. The vouchers create a paper trail, which documents all of the people involved with that particular transaction, as well as their tasks associated with that transaction. In such a way, it is easier to assess who is responsible for what.

Example of Vouchers

A small minimarket orders fresh food from its supplier every few days. The manager of the fresh food department orders 50 pounds of meat and fish, and the owner initiates the order to approve the delivery. When the minimarket receives the order, the content of the delivery is compared to the order to make sure everything was received.

At such a point, a voucher is issued. It contains the purchase order, the shipping receipt, and the invoice. The amount due is also included, and it will be registered in the accounts payable until the payment is made.

The voucher will be sent to the owner, who reviews everything to make sure that all the information is accurate, and then the payment will be approved. Afterward, the transaction is closed, and the voucher will be registered as a paid voucher in the balance sheet.

Related Readings

CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

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