Types of Accounting Documents You Should Know And What There Are For
As a SME business owner, sometimes you may be confused on some accounting documents and what they are. Every day, numerous business transactions occur in an entity and these transactions are recorded and controlled by several sources of documentation. For operational reporting some of these papers are recorded and reported. Some of them are accounting documents that are used to keep track of financial data. Understanding those accounting sources of documents is important and it may enable you communicate more effectively with coworkers and auditors. So, what are the type of accounting documents and how accountants utilize them in daily usage. We will go over the 8 different sorts of source materials in this post. Let's get started!
First, what is sales quotation? A sales quotation also known as a business sale quote is a document that shows a potential buyer or customer the cost of certain services or items. Suppliers or resellers typically utilize it to start a commercial transaction. A professional sales quote includes a particular list of items and services, as well as pricing and payment terms. Sales quotations are prepared at the request of a prospective customer who wants to know the cost of particular items or services before making a purchase. With Xero on the cloud, you can prepare your sale quote and directly send to your customers for acceptance. They will get an email with your sale quotation and with a click of button they can accept your sale quotation and you will get notified in Xero.
The second source of accounting documents in the article is sale invoice. A sales invoice is a financial document that documents a transaction. Sales invoices serve as a record of the services a company has supplied to a client, the date the services were performed and the amount the client owes the company. A sales invoice would typically include a description of the service given the amount due and the payment date. A sales invoice's aim is to explain the services a company delivered to a client, the amount due for those services and the payment deadline. Clients are obligated to pay the company for its services when they get sales invoices. They operate as the foundation for a company's financial statements and serve as vital documentation of a business transaction for both the business and the customer. To make sale invoicing easy, you can turn your sale quote in Xero into a sale invoice and email to your customer immediately. You can save your time and paper from printing it out. In Xero, you can also enable your sale invoice with online payment acceptance method such as PayPal and Stripe. Your customer can click the invoice to pay quickly with their credit card.
Next, a delivery order is a document that a seller or carrier can use to deliver goods to another party. The delivery order show the delivery details and also serve as an acknowledgement for the goods received and accepted by the customer.
Now to make you less confused an official receipt or OR, is a document that serves as proof of a service sale made by or to a company. Official receipts should be given by the business providing the service as soon as money is received from the consumer. To be more specific, the receipt is used by businesses as proof of payment for products and services. It is a source document prepared by a seller in anticipation of receiving money from a third party. The original copy, which is also created in duplicate is given to the person who is dispensing cash or making a payment. The seller maintains the duplicate as a record of the transaction and it will include payment information such as the buyer's name, the date, the total amount paid and the method of payment in cash or check. Xero can help you with official receipt whenever a customer payment is recorded. After the customer payment is cleared at your bank, you can click send official receipt and your customer will get their official receipt in seconds.
Other than that, purchase order also is one of the important documents in accounting. Let's try to make it more natural. You request quotations from a few suppliers and then you find one whose offer is consistent with your requirements and you place a purchase order with that supplier. As a result, a purchase order is a form of business document that specifies the goods or services that the firm intends to purchase from another business. A purchase order is usually created in two versions, one of which is delivered to the company from which the products or services will be acquired and the other of which is retained internally to keep track of the company's purchases. Purchase orders are frequently numbered in order. Purchase orders are usually issued and signed by the person who is allowed to do so in the buying department but they may also need to be approved by the company's CEO, Director or Partners. You can rely on the purchasing flow in Xero where purchase order is drafted in Xero and submit for manager approval. User activity and trail will be recorded and shown in Xero as to who, when and what have been done to approve the purchase order.
Moreover, supplier bill or also known as supplier invoice. The supplier invoices and bills issued by the providing supplier and received by the buying client are known as supplier invoices or supplier bill. Supplier invoices are also known as vendor invoices by customers. The buyer and seller's transaction are itemized on a supplier invoice. If the customer was given credit for the purchase, the invoice will generally include payment terms as well as payment alternatives. You can use Xero to keep track of all your suppliers bills and invoices easily.
1) You can save the supplier bills and invoices in Xero as an attachment in each bill record. So, you don’t need to print out and keep a hardcopy file. It is so much easier and simple to manage and keep your records.
2) Xero can help you with smart data extraction and fill up the supplier’s name, invoice number, invoice date and the invoice amount. It helps to reduce the manual entry and work needed.
3) You can schedule supplier bills and invoices for payment and set the planned payment date.
A payment voucher is a document that serves as documentation of a financial transaction between two parties. The payment voucher has a number of advantages in the business world. Several cash transactions may occur between several business entities at any same moment. As a result, possessing documentation in the form of a payment voucher is both required and recommended. It also shows which invoices have been approved for payment. Single type of payment voucher is sufficient for all types of payments in small business organizations. You can select supplier bills and invoices on Xero for payment. Once the payment is recorded, you can send the payment voucher to your suppliers with 1 click button easily.
Statement of Accounts
Finally, what is statement of accounts. Suppliers often issue a statement containing all outstanding goods that you or your organization owe to them on a monthly basis for credit purchases. An account statement is the name of this document. So, an account statement is a form of accounting document given to a client by a supplier that lists all transactions on the customer's account, including all invoices and credit notes issued, as well as all payments received from the customer. The phrase is important because it allows the customer to compare what they think they owe the supplier to what the supplier thinks they owe them. Any inconsistencies can then be investigated. It is also a very effective method to remind your customers of their outstanding balance. To make your work easier to follow up payment from your customers, you can easily send out statement in bulk to all your customers email address with attached statement of accounts on Xero.
GETTING DOWN TO BUSINESS
We hope that our article on the various type of accounting documents give you a better understanding what they are. Feel free to get in touch with our team of expert in cloud accounting solutions. Reach in touch with us at email@example.com
Also, take a look at our Bookeeping Services that will ease your life so much more!