What are Cash Receipts and Why They are Important for Your Business
If you’re running a business that runs its day-to-day transactions through cash, generating cash receipts should be your priority.
In fact, professional business people don’t keep anything unrecorded, and this commitment is sky-high when it comes to cash.
This article will find the functions, purposes, importance, and relevant examples of generating cash receipts and maintaining your daily business processes with its help.
What are Cash Receipts?
A cash receipt is a record of a transaction through cash. It is an acknowledgment in a written form confirming that the money has been received in exchange for a product or service. It is a printed statement of the prices of the items the vendor sold to the buyer of the product or service.
A cash receipt provides you with the required information about the transaction. The transaction data is written in the receipt, generally at the top or the bottom. It contains a series of digits that determines the unique identity of the purchase. You will see the amount of cash received and charged in the cash receipt in the form of items and the respective prices. You will see a final value of money, the total amount received in the process. The name of the cash payer, preferably the buyer of the product or service, is written on the receipt.
Furthermore, the payment method is mentioned in the receipt, which might be through cash or checks. The vendor's signature is the acknowledgment of the cash receiver that confirms the transaction's completion.
After generating the receipts, most businesses keep one copy to themselves, which can be helpful later on, and provide one copy to the customer.
Why are Cash Receipts used?
Cash receipts are used for various purposes and its functions are multivariate as well. Below are some of the crucial aspects businesses consider which induces them to generate receipts at the point of sales.
- Sale & Purchase Transaction Tracking: A cash receipt is a remarkable way to record sales and purchase transactions. Whenever a business goes for a sale, a cash receipt may help them acknowledge the transaction's point. They can give a copy to the buyer, which can help both parties to be transparent about the point of sales.
- Accurate Business Bookkeeping: Accounting records are vital for business as companies need to ensure that the bookkeeping process is errorless. Businesses across the globe keep the records of the transactions so that they don’t face any issues with the calculation when the income statement is made, and the entire process is reconciled.
- Staying True to the Customer: One of the reasons why businesses make receipts and provide them to the customers is that they want to keep the process transparent and undoubted. Staying true to the customers with instant records through generating a piece of receipts is, of course, a smart thing to do. Professional businesses walk that extra mile to keep the customer relationship upright.
Importance of Cash Receipts for your businesses
While generating the receipts on the point of sales with the help of online receipt generators like Receiptmakerly, companies realise how important it could be for their business. Cash receipts are simple and straightforward, but they can bring massive significance to your business. Below are the top five important things you can get out of a cash receipt for your business.
- Tracking Income & Expense: Maintaining the daily balance sheet is a regular job for the accountants working for a company. But this work can get messy if the company doesn’t provide them with an accurate set of data on the transactions that take place every day. Generating receipts for cash at every point of sale can be simple work, but that would help the accountants keep up with the calculation and help the balance sheet be balanced all the time.
- Financial Decision Making: If you don’t look at the historical data, it won’t be possible to make erudite decisions on the financials of your business. A miscalculated set of historical data will only deceive you as the financial projections would be flawed. So, keeping the transactions recorded via printed cash receipts will help you make a prudent decision to keep the financials out of errors.
- Tax Calculation: Businesses need to pay taxes regularly, and the tax margin varies from country to country. However, no matter what the tax margin in your country is, it generally depends on your business’s income. Generating receipts for cash to the companies at the points of sales is a smart task that enables you to keep the income recorded to be prepared for future tax payments.
- Brand Reputation & Awareness: When you hand over the payment cash receipts to your customers, you provide them with a piece of paper that contains your logo, brand name, and related information. So, providing them with this piece of paper can be a distinguishing factor for your brand. You may also differentiate yourself from your competitors if none of them choose to consolidate their brand reputation by generating cash receipts.
- Preparation for the Financial Audits: Audits are the nightmares of business firms as they have to be accountable for bits and pieces of financial and accounting data over a period of time. Suppose your business habitually generates receipts regularly every time it receives money from the customers and pays the suppliers. In that case, you will at least get some advantages for preparing yourself for the audit.
Examples of Cash Receipts
Below are two examples of generating receipts for cash that occur most often around us.
- Example-1: Think of a super shop. You go there intending to buy a handful of items and gather them in the cart. After you finish shopping, you pay the money at the cash counter. In return, you get a cash receipt that works as an acknowledgment of the mart that you have paid money and the transaction process is completed.
- Example-2: Now, take the angle of a business in the face of supply entry. Say, You are an accountant at a cookies company, responsible for the daily transactions your businesses make with the supplier side. Every day your company gets supplies from a local supplier who supplies eggs, flour, additive colour, milk, and other elements required to manufacture cookies. Each time there is a supply entry, you receive receipts from that local vendor. If your business doesn’t have enough liquid cash to pay them off instantly, you go for on credit sale and add that receipts to the accounts payable of your business.
Benefits of Cash Receipts
Below are the benefits of generating receipts for cash from businesses’ and customers’ perspectives.
From Business’s Perspective:
Businesses generating the receipts for the customers always enjoys the advantages of keeping things recorded to make calculated financial decisions in the future. These receipts also help them maintain a log of their customer base and sales estimates.
As accounting records are evident, preparedness for the audits would be vital. Furthermore, when it comes to managing the suppliers, the receipts that a business receives help it forecast the upcoming expenses and the tax it must pay shortly.
From Customers’ Perspective:
Customers, while receiving a cash receipt after paying for the product, get proof of ownership for the product. The receipt is proof that the transaction has been done successfully and can help a particular customer keep his own bookkeeping upright too.
Again, if, for some reason, the customer needs to return the product and get a refund, this cash receipt would be crucial in that case.
The bottom line
Cash receipts are essential for businesses and customers to keep the transaction transparent. They can help both parties avoid the risk of running any payment-related issues. On one hand, it helps a business grow its customers' trust. On the other hand, accounting bookkeeping is done successfully, which eliminates miscalculation issues.
So, get started with Receiptmakerly to help your business stand out from competitors and keep things simple and errorless.`