Understanding Vouchers: Use and Importance in Accounting

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A voucher, in accounting, is an internal document that collects and summarizes the paperwork needed to approve and pay a liability, usually a bill owed to a supplier or vendor. It works as a cover sheet: it identifies who is owed, how much, when, and which accounts the transaction affects, and it carries the signatures that authorize payment. The supporting documents attached to it typically include the purchase order, the receiving record and the supplier’s invoice. The word comes from “vouch,” meaning to attest: a voucher vouches that a payment is legitimate.

Outside accounts payable, “voucher” can also mean a redeemable coupon or ticket, or a government benefit such as a housing or school voucher. These are covered at the end.

How a voucher works

Companies routinely buy on credit, with suppliers allowing payment later on terms such as 30, 60 or 90 days. During that gap the company has a short-term obligation, and someone has to confirm the bill is valid before it is paid.

The voucher is where that confirmation happens. A typical flow looks like this:

1. Purchase order. An authorized employee orders goods and records the quantity, price and supplier on a purchase order.
2. Receiving. When the shipment arrives, someone counts it against the purchase order and records what was received on a receiving report or shipping receipt.
3. Invoice. The supplier bills the company.
4. Matching. Accounts payable compares the three documents (often called a three-way match). Quantities, prices and terms should agree.
5. Voucher preparation. A voucher is prepared, the documents are attached, and the general ledger accounts are assigned.
6. Approval and recording. An authorized person signs off, and the voucher is entered in the voucher register, a journal listing every approved voucher, usually by voucher number.
7. Payment. On or before the due date, the payment is made and the voucher is marked paid with the payment date and reference (such as a check number).

Vouchers are normally prenumbered and used in sequence, so a missing number or a duplicate stands out and a single invoice is harder to pay twice.

What goes into a voucher

The contents vary by company, but a complete voucher generally includes:

• Voucher number and voucher date
• Name of the vendor or supplier to be paid
• The supplier’s invoice, with its number and date
• Payment terms: amount owed, due date and any early-payment discount
• The company’s purchase order
• A receiving report or receipt showing the goods arrived
• The general ledger accounts to be debited and credited
• Signatures of the people who authorized the purchase and the payment
• Proof of payment and the date paid, added once the bill is settled

Voucher date vs. invoice date. The invoice date is set by the supplier and often starts the clock on payment terms. The voucher date is when the company prepared or approved the voucher internally. Calculate the due date from the date the terms specify, not automatically from the voucher date.

Recording a voucher: debit or credit?

Under a voucher system, approving a voucher creates the liability, and paying it removes the liability. Vouchers payable is a liability account, so it carries a credit balance: it is credited when a voucher is approved and debited when the voucher is paid.

The debit on approval depends on what was bought: inventory or materials (an asset), an expense such as utilities or repairs that flows through the income statement, or equipment and other long-term assets. The voucher’s account distribution tells the bookkeeper which applies.

Worked example (hypothetical)

A restaurant orders meat and fish from a supplier every few days. On one order, the manager writes a purchase order for $4,000 of product, and the owner initials it to approve the purchase. The supplier’s terms are 2/10, net 30: a 2% discount if paid within 10 days, otherwise the full amount is due in 30 days.

When the delivery arrives, staff weigh and count it against the purchase order and complete a receiving slip. The supplier’s $4,000 invoice arrives the same day. The bookkeeper matches the three documents, prepares voucher No. 1047, attaches them, and assigns the food inventory account.

On approval (assuming the company records purchases at the gross amount):

The $4,000 now sits in vouchers payable on the balance sheet.

On payment within the discount window, the owner reviews the voucher before signing the check. The discount is 2% × $4,000 = $80, so the payment is $3,920:

Some companies credit a separate purchase discounts account instead of inventory. The payment date and check number are written on the voucher, it moves to the paid file, and vouchers payable drops by $4,000, assuming no new bills were vouchered in the meantime.

Why vouchers matter

Internal control. The voucher ensures no payment goes out unless it was authorized and the goods or services were received. Requiring matched documents and signatures blocks payments for phantom deliveries, wrong prices or unapproved purchases.

Segregation of duties. Splitting critical tasks reduces the risk of theft: one person orders, another receives, another approves payment, another signs the check. The voucher records who did each step, leaving a paper trail that the duties were actually separated. Collusion is still possible, but it requires several people.

Audit evidence. Vouchers support the claim that recorded purchases exist and were received, justify cash payments to vendors, and show which ledger accounts were used. The voucher register also gives a complete list of liabilities to compare against the accounts payable balance.

Cash management. Because each voucher shows its due date and discount terms, a company can schedule payments to capture early-payment discounts and avoid late fees.

Limitations

A voucher system adds paperwork and steps, which can slow payments, so many firms handle small, frequent expenses through a separate cash or petty cash voucher process. The control is only as strong as the reviews behind it: an approver who signs without checking the attachments provides little protection. And a voucher confirms that documents agree with each other, not that the price was a good one or that the supplier is legitimate. Vendor vetting is a separate control.

Common terms readers confuse

• Voucher vs. invoice. The invoice is the supplier’s bill. The voucher is the company’s internal document that approves paying it, with the invoice attached as support.
• Voucher vs. ledger. A voucher is the source document for a single transaction. The voucher register lists vouchers in order, and the general ledger summarizes balances by account. Information flows from voucher to register to ledger.
• Purchase voucher. A voucher recording a purchase, usually on credit, before payment.
• Payment voucher. A voucher authorizing or documenting a payment to a vendor.
• Cash voucher. A voucher supporting a cash payment, often a small expense, signed by the person receiving or spending the cash.
• Debit and credit vouchers. In many bookkeeping systems, a debit voucher records a cash payment and a credit voucher records a cash receipt. Voucher-based software such as Tally uses types like these for purchases, sales, payments, receipts and journal entries.

Other meanings of “voucher”

• Redeemable vouchers are issued by businesses such as airlines, hotels and restaurants for customers to exchange for goods or services. They usually carry expiration dates and conditions.
• Section 8 housing vouchers, under the federal Housing Choice Voucher Program administered by the U.S. Department of Housing and Urban Development, help low-income families, the elderly and people with disabilities rent housing in the private market.
• School vouchers let eligible families use part of the public funding that would otherwise go to a public school toward a private school.

The Bottom Line

In accounting, a voucher ties the order, the delivery and the bill together, records the accounts affected, and proves someone with authority approved the payment. Approved but unpaid vouchers form vouchers payable, and paid vouchers become the audit trail for cash disbursements.