A cash receipt is a business document given by a seller to a buyer. It can be handwritten or machine generated. The primary purpose of a receipt is to provide a primary record of a sale, and it does not have to be just for cash. It can be issued for cash equivalents as well, such as credit card transactions. It can also be construed as a contract between buyer and seller.
As a primary document, the receipt aids both the buyer and the seller. The buyer has proof of the purchase. He has a source document that he can provide to bookkeeping to input into the ledger. He can also use this document in the case of a tax audit to prove his business expenses.
The seller can use the receipt for much the same purposes. Keeping records of sales allows him to balance sales against increases in cash and reductions to inventory. If he is audited, the receipt will act as evidence that he has correctly recorded all business transactions. Receipts can also be used to verify that the company is credited properly for all credit card transactions by the credit card processor.
If a merchant has a refund, exchange, or money back guarantee policy, the cash receipt is typically required before the merchant will make a refund. For this reason, it is imperative that all terms of the policy be addressed on the receipt. In fact, either a link to the policy or the actual terms may be included on the receipt. For example, if the policy states there is a 100 percent money back guarantee during the first 30 days after the sale, then the receipt should naturally include the date of sale.
While the cash receipt is predominantly an accounting document, merchants may choose to use the receipt to advertise. The receipt may announce upcoming sales, offer future discounts, or to remind customers for other perks, such as customer loyalty programs. These little reminder may seem like nothing, but often they convert into future sales.
Parts of a Cash Receipts
While not all receipts contain the same details, here are the basics.
Not only does it make sense for tracking purposes to include the company name and contact information, it is a good marketing tool. What if the customer buys cupcakes for Missy B’s Bakery for a company party. If the cupcakes are big hit and the customer cannot remember the bakery name, she can use the receipt to refer other company employees to the bakery. In the same vein, if the customer finds a problem with the cupcakes, she can quickly locate the bakery phone number on the receipt to resolve the problem, and the merchant can retain a good customer relationship.
The receipt usually lists each item purchased. If more than one of an item is purchased, then the merchant may list how many sold, the per item price and the grand total price for that item. The merchant should add enough information that the buyer can identify the item, such as the product name. He should also add enough information to get the item seamlessly back into inventory in the event of a return or exchange. Usually this is a Stock Keeping Unit (SKU) number.
Subtotal, Tax, Total
The itemized list is totaled. This amount is listed on the subtotal line. The amount of tax is listed separately, then the subtotal plus tax is computed on the total line. The reason tax is listed separately is twofold. First, in good recordkeeping, all components are transparent. Second, when the bookkeeper records the transaction, he must track sales tax separately, then periodically send that money into the state. Keeping tax separate makes that streamline process. As a double check against sloppy change-making, the amount tendered and the change due back to the customer may also be listed.
Credit Card Additions
If the transaction is settled as a debt or credit card charge, the cash receipt will indicate this and include the credit card number, or a truncated version of it, the owner’s name, and expiration date. Most importantly, the receipt becomes a contract between the merchant and the buyer. The buyer will sign the receipt to indicate his agreement to buy the goods in exchange for a debt being submitted against his credit line.
Many merchants choose to share an itemized receipt with the buyer as well as summary credit card receipt that he sends to the credit card processing company. The purpose is the help protect the buyer’s credit card information and to make it easier to segregate credit card sales for bookkeeping purposes.
Points and Perks
Many merchants now award loyalty points to customers. They use the cash receipt to show how many points were awarded and what the customer’s total points to date are. They may also list the amount of money that was saved by using coupons or through the purchase of sales items. It is a cheap and convenient way to remind customers that the merchant values their business. Merchants may also print coupons on the back of receipts or mention upcoming sales.
Cash Receipt Copies
Whether using an automated receipt, such as one generated by a computer or cash register, or a manual receipt, remember that the receipt is a contract. It is an agreement between the buyer and seller to exchanges goods or services for cash. Because it is a contract, two copies of the contract are required. All good contracts make sure both parties are provided a copy.
A cash receipt is an important business document. It has value to both the buyer and the seller. As with most business documents, the merchant will get the most out of it if he customizes to best suit his business needs. Remember that the receipt can be more than just record of sales, it can a marketing tool to aid in customer loyalty and good customer service.