Is a Voucher a Check? Key Differences Explained
Unravel the confusion between checks and vouchers. Discover their distinct functions in finance and accounting, and how they differ fundamentally.
The terms “voucher” and “check” are often confused, though they serve fundamentally different purposes in financial systems. A check is a direct payment instrument, while a voucher is an internal record or authorization that may lead to a payment. Understanding their distinct roles is important for financial management.
Understanding a Check
A check is a written, dated, and signed order instructing a bank to pay a specific sum of money from the drawer’s account to a designated payee. It functions as a direct payment method. Checks are negotiable instruments, meaning they can be transferred from one party to another. The Uniform Commercial Code governs checks as a type of negotiable instrument.
The essential components of a check include the drawer (the person writing the check), the payee (the person or entity receiving the payment), and the drawee bank (the financial institution on which the check is drawn). For a check to be valid, it must contain an unconditional order to pay a definite sum of money, be payable on demand, and be signed by the drawer. The bank must honor the check if sufficient funds are available.
Understanding a Voucher
A voucher is an internal document that provides evidence of a financial transaction and authorizes its recording within an organization’s accounting system. It serves as a control mechanism, ensuring payments are authorized and goods or services received. While a voucher may precede a payment, it is not the payment itself.
Vouchers are used for documenting expenses, authorizing payments to suppliers, or serving as a record for auditing. Each voucher contains detailed information like the transaction date, amount, account codes, a description of the transaction, and authorization signatures. This documentation helps maintain accurate financial records and supports audit trails.
Key Distinctions
The fundamental difference between a check and a voucher lies in their nature as financial instruments. A check is a direct instrument of payment, enabling the immediate transfer of funds from one bank account to another. Conversely, a voucher is an internal accounting document that records or authorizes a transaction; it is not a direct means of payment.
Checks are classified as negotiable instruments, allowing them to be transferred and cashed or deposited by the payee. Vouchers, however, are generally not negotiable and cannot be directly exchanged for cash or deposited into a bank account. Their primary purpose is to document and authorize financial activities within an organization, whereas a check’s purpose is to facilitate the actual transfer of money.
From a legal standpoint, checks have specific legal standing as financial instruments under regulations like the Uniform Commercial Code. Vouchers, while crucial for internal controls and auditing, primarily function as internal accounting records. When a check is issued, the recipient can directly deposit or cash it. A voucher, in contrast, requires further internal processing, such as review by an accounting department, before a payment is subsequently issued, often via a check or electronic transfer.
Due to these core differences in function, negotiability, and legal standing, a voucher is distinct from a check.