All About Cash Memo

Cash Memo is one of the transaction records between buyer and seller, and the seller arranges for the sale of the money, and the same is given to the buyer when the goods are purchased. It is the documentary proof of all transactions made by the business, and is proof of the cash purchase of the consumer. It is prepared with a copy, as the first one will be given to the buyer, and the seller will keep a duplicate copy.

Cash Memo

Cash Memo is equivalent to a copy of an invoice and a legal document. It is used to know business financing, tax payments, reconciliation and analysis, Inventory planning, cash flow status, etc. It is a negotiable trading tool that serves as the seller’s proof that money has been received from the customer through the goods sold and that the buyer can book the costs and account for them in cash balance. Credit trading cannot be done with a cash invitation, as it can only be issued for a transaction if the money is received.

Format of Cash Memo

Here we can see the sample of format of cash memo

Contents in this Cash Memo

Name and address of the supplier – Verifying that the supplier has sold.

Buyer’s Name and Address – Serves as proof that the buyer is recording the purchase.

Cash memo serial number – Serves as a tracker for business transactions, recording all transactions without losing any transaction.

Memo date – Monitoring daily and monthly transactions.

Customer or customer order number – Tracking the volume of operations performed by a single customer.

Description of goods – Identifying the type of goods for sale.

Price of goods – Good tracking of sales and knowing of inventory.

Property Rates – To calculate sales value.

Price – Ability to do business-based sales.

Discount (Trade discount or cash discount) will be shown separately – Tracking discounts offered.

Buyer and supplier tax registration number in the event of a sale – For tax purposes.

The sum of the amount stated in the financial memorandum needs to be written in words and numbers.

The money memorandum must be signed by a duly authorized person – In order for it to be more effective Terms and Conditions if applicable.

Creation of Cash Memo

1.Write the transaction date in the currency memo.

2.Write the name and address of your business in the upper right corner, underline it. Make sure all accounting activities are accurate to avoid any financial conflicts over time.

3.Fill in the details In the first item by writing “cash” or “receipt” depending on how you calculate the work.

4.Fill in the second item by writing down all the information related to the purchase or sale of goods that occurred during this calculation period (for example, Olive, Monte Carlo). If there is no specific name involved in trading between your business and another person / company write “anonymous” under his or her name.

5.Fill in the third number by writing down the number of items bought or sold during this calculation period (for example, two jerseys and two pairs of jeans).

6.Write down in item Four all transaction details (for example, 100 for each jersey, 125 for each denim).

7.Write down In Item Five the total amount paid or received during this calculation period (for example, $ 450).

8.Complete the sixth and seventh items by writing down all the relevant details related to the accounting process for your business.

9.Complete the last paragraph by writing down your signature (or company name) along with your contact details such as phone numbers or email address in case you need to contact you about this purchase.

10.You can also add your company logo stamp at the bottom left.

 You should complete this memo after calculating all transactions using cash or other payment methods to effectively manage accounting processes and avoid accounting conflicts.

Example of Cash Memo

Here we can see a simple example of the cash memo…

Advantages of Cash Memo

1.it is simple and effective to prepare and track.

2.Suitable for all small business transactions.

3.Legal document, and equal to invoice.

4.It is more than a manual process, so no separate computer program is required.

5.Certified as always carrying the signature of the responsible person.

6.Jobs made with cash memo favor the business rather than cash flow as the customer pays cash immediately when it is sold.

7.There will be no customer left on sales made by cash memo, as well as operating fees

8.the business position will be good. Funds can be better spent on business. Since a transaction on credit cannot be made under a memo, there will be no bad credit in business.

Disadvantages of Cash Memo

1.Easy to manage transactions

2.Not for big business

3.Banking operations are better than money shopping as they have the right track 

4.it is possible as income and expenses are monitored by hand, and there is no proper tracking system.

5.Retailers and customers may not always be interested in paying bills immediately as they prefer to have certain credit dates.

6.It is a man-made system, so a responsible person should be appointed to take care of these tasks as the risk is greater than cash management.

Conclusion

A cash memo is a business voucher issued by a seller for a sale. The system is simple and effective for everyday purchases. It is a legal document, and all transactions calculated using a cash memo are valid. It is a testament to all the sales done by the business. Suitable for small business where business volume is low and natural.