FNSICGEN305BPrepare and Process Banking Documents

Prepare and process banking documents

One of the key elements to success in business is to manage the money – both incoming and outgoing. All businesses operate a business cheque account and rarely pay for goods or services with cash – the exception is when purchasing low cost items (eg tea and coffee for the staff, courier fees and stationery items) payment for which comes from the Petty Cash fund. Larger amounts for payment of trade goods and expenses incurred in the day to day operation of the organisation will be paid with cheques, BPAY, internet banking, EFTPOS and/or Debit/Credit Cards.

Sales and services result in collection of monies commonly in the form of:

Cash (notes and coin)Cheques

Debit/Credit card payments (Visa, MasterCard)Internet banking

EFTPOS (Electronic funds transfer at point of sale)

Cash, Cheques, manual Debit/Credit card vouchers, and money orders are taken to the bank and deposited. These items are usually banked daily. Daily banking minimises the risk of theft and fraud.

Internet banking and electronic funds transfer using Debit/Credit cards or savings/cheque account cards will be processed directly by the bank and are therefore not recorded in the bank deposit book.

Organisations will have policies and procedures (written or practiced) for receiving and receipting money, balancing cash register drawers and forwarding funds for banking.

An organisation must comply with its bank’s policies and procedures, which are agreed to when an organisation’s account is established.

Important features of business cash control are:

An individual should be responsible for its security at all times. If responsibility moves from one person to another, the cash should be counted, verified correct, and signed for.

Bank daily the cash received on that day (or the previous day, depending on the type of business and its proximity to the bank). Businesses operating over the weekend and on public holidays should make separate deposits for each day’s trading when the bank reopens.

Bank intact: that is, the whole of the cash received should be banked without any payments or expenses being taken out of it. This leaves a clear audit trail that proves the honesty of those handling the cash.

Regardless of whether an organisation is large or small, a complete record must be made of all monies received. Each transaction must be acknowledged by at least one of the following:

 a receipt  a cash register docket  a credit card sales voucher

A receipt may be prepared electronically by a computer program such as MYOB or Quicken, a cash register or manually by using a carbonised receipt book.

Receipts contain the following information:

Date of the transaction.

The receipt number – all receipts are accountable forms and are numbered sequentially.

The amount in figures.

The amount in words (on a manual receipt).

The amount of discount given (if applicable).

The amount of GST included in the cost.

A description of what the payment is for.

Manual receipt

Smith & Brown IncorporatedReceipt No 56987
Received from M Student Date:2/2/XX
For 10 X blue biros & 2 X red biros
The sum of Thirteen dollars and 22 cents
Signed Ben BrownCash/Cheque $13.20
GST inclusive

Cash register receipt

Preparing accurate bank deposits involves entering and balancing all the different types of payments received. When preparing money for banking you will need a calculator, pen, cash analysis form, elastic bands, cash bags and the bank deposit form.

Remember when you are counting cash and preparing a bank deposit, it should be done away from public view.

Preparation of money for banking

Cash

As you are no doubt aware, cash consists of notes and coins.

Australian notes are made of polymer in denominations of

$100$50$20$10$5

When preparing the cash for banking the notes are batched. The process for this is:

Sort notes into the same denomination with the transparent window in the bottom right-hand corner

Bundle each denomination into groups of ten and secure the flat with an elastic band.

Each flatis then grouped into batches of ten flats known as a bundle and secured with two elastic bands

Australian coins are sorted into the following denominations

$2$150c20c10c5c

The value of damaged notes is as follows:

If two-thirds of a note is present, it can be counted at full value.

Half a banknote has half the face value.

Less than half a note has no value at all.

Coin is batched into plastic bags in the quantity marked on the bag. These values are as follows:

A bag of $2.00 coins = $50.00

A bag of $1.00 coins = $20.00

A bag of 50c, 20c, or 10c coins = $10.00

A bag of 5c coins = $2.00

If there are insufficient coins for a bag, write the value of each denomination on a piece of paper marked with a red cross and put it in a separate bag. This indicates to the bank teller that it is not a complete bag.

Another method of batching coin is to use brown paper and roll the coins. There is quite a skill involved in this method and most people opt for the recyclable plastic bag method.

Use a cash analysis slip to help count the cash, then enter the information on the cash summary of the bank deposit.

Date: 23 April 2XXX
Notes / Quantity / Value
$100 / 24 / 2400.00
$50 / 9 / 450.00
$20 / 8 / 160.00
$10 / 8 / 80.00
$5 / 16 / 80.00
Coin
$2 / 28 / 56.00
$1 / 24 / 24.00
50 cents / 29 / 14.50
20 cents / 43 / 8.60
10 cents / 22 / 2.20
5 cents / 25 / 1.25
TOTAL: / 3276.55

Cheques

A cheque is an unconditional order in writing addressed to a bank, requiring the bank to pay on demand a certain sum in money. However cheques are not legal tender in the way that cash is. This means that you can refuse to accept cheque payment and insist on cash if you wish. Businesses can decide whether they will accept cheques from their customers. If you have ever tried to use a personal cheque in a shop you will know that many retailers do not accept them, preferring cash or credit cards where payment is guaranteed.

There are three parties to a cheque:

drawer – the person who writes the cheque

drawee – the bank holding the drawer’s bank account

payee – the person (or organisation) the cheque is written out to

All cheques received by your organisation should be checked prior to banking to ensure they are accurate and valid and will not be dishonoured (returned unpaid) by the bank as follows:

The date is not postdated (dated ahead of today’s date).

The cheque is not stale (dated more than 15 months ago).

The cheque is signed.

The payee is correct. If another name appears next to ‘Pay’, there should be an endorsement on the back of the cheque, signing the cheque over to the organisation.

The amount in words and the amount in figures agree.

Any alterations are initialled by the drawer of the cheque.

Date ___22 July 2XXX
To __Hannahs BKK___
For ___Accounting Fees_
______
Balance b/f ___6050.90
Deposits ___.00______
This chq ___200.00__
Balance c/f __5850.90_
123400 / What? Bank
Gosford NSWDate __22 July 2XXX_


Pay ___Hannahs Bookkeeping Services______or bearer

The sum of ____Two hundred dollars only______
______
___Jo Smith______
Smith & Brown Incorporated
123400 631-289 753169

There is an instance when the bank will accept a cheque with discrepancies, this is:

When the amount in words is different to the amount in figures resulting in the bank paying on the lesser of the two amounts. In this case the lesser amount should be shown on the deposit slip.

Crossing cheques

For security purposes the words ‘NOT NEGOTIABLE’ written across a cheque ensures that only the Payee can receive the money.

Cheques that are to be deposited in the organisation’s account should have ‘Not Negotiable’ either written or stamped across them before depositing. This may be done by another member of staff upon opening the mail and finding cheques for payment of accounts that have not been ‘crossed’.

Cheques made out to CASH should not have ‘Not Negotiable’ written across them as this will prevent them being cashed. Generally most cheque books for organisations have ‘Not Negotiable’ preprinted on them. In this case the signatory of the cheque can turn the cheque over and write on the back of the cheque ‘Please pay cash’ and sign this.

Examples – 3 Cheques for deposit on 23th April 2XXX


Money orders

This is a no hassle alternative to using cheques and bank cheques and usually more affordable than a bank cheque. They are a convenient and safe way to pay your bills, transfer money or sendamounts overseas. Customers often use this method to pay their bills.

Money orders are banked in exactly the same way cheques are banked.

Once the cheques and money orders have been validated (checked for errors) they are written up in the deposit book.

Credit card transactions

Credit card sales can be made in two ways:

  1. Manually using a hand held machine or
  2. Electronically, using EFTPOS (electronic funds transfer at point of sale)

Manual credit card transactions

Some businesses do not have on-line facilities so manual credit card transactions are made. These transactions are also made manually in cases where the on-line network is not operating.

The credit card is placed on a portable machine and a triplicate voucher is inserted into the machine. Part of the machine is then ‘swiped’ from left to right across the voucher so an imprint of the credit card details is made on the voucher. Details of the sale are hand-written on the voucher and the buyer signs in the signature block.

Two carbon copies have now been produced. One copies for the cardholder (buyer), one is for the merchant (seller) and the original goes to the bank with a summary of all credit card sales for the day.

When accepting payment by credit card using the manual method, you should ensure that the transaction is valid by:

Comparing the customer’s signature on the voucher with the signature on the card

Checking the expiry date on the card – is it current?

Telephone the merchant authorisation centre for approval if the amount is above the authorised credit card limit for your organisation.

Check the card number against the latest list of stolen and invalid cards issued through the banks.

If you suspect that the card is stolen or being used illegally, you should follow company policy in dealing with the situation.

Examples - 2 sales voucher (please note there is now no BANKCARD option)

A credit voucher is issued when a customer returns goods. A credit voucher is processed at the bank and the amount is credited to the customer’s account (in other words the money is taken out of the business’s bank account and transferred back to the customer)

Example –1 credit voucher (please note there is now no BANKCARD option)

At the end of each day the ‘sales’ vouchers and the credit vouchers are recorded on a merchant summary.

Example - Merchant Summary

After completion check that the Merchant Summary contains the following information

The name of the business banking the Merchant Summary.

The signature of the person preparing the deposit.

The date.

The listing of the individual Sales voucher amounts.

The total number of Sales vouchers.

The total value of Sales vouchers.

Notice the space for Credit vouchers. These REDUCE the value of the Merchant Summary because they represent money going out of the business

The details from the Merchant Summary are recorded on the bank deposit.The summary and the bank copy of all vouchers are placed in a special envelope and included in the day’s banking.

EFTPOS – (Electronic funds transfer at point of sale

Transactions are made electronically through a system of EFTPOS terminals. The customer ‘swipes’ their debit/credit card through the electronic machine and enters a PIN (personal identification number) Details of the sale are printed on a docket through the cash register. If the customer has used a credit card and has elected to sign rather than use a PIN the Merchant will check the signature against the credit card after the customer has signed.

Two printed reports of the sale are made. One is given to the cardholder and the other is retained by the merchant. The bank’s record is generated by the electronic transaction.

The money is transferred from the customer’s bank account to the merchant’s bank account instantly. There is no need to record these transactions on the Bank deposit.

The EFTPOS system checks that the:

Card has not been reported stolen.

Card expiry date is not earlier than the current date.

Merchant has authority to accept the amount of the transaction.

If the card holder has reached their credit limit, or if there are insufficient funds in the customer’s account, the transaction will not be processed.

Benefits of EFTPOS for an organisation

Reduces the amount of cash taken (and therefore the amount of cash to be banked).

Reduces paperwork and office time.

Lowers the risk of theft or fraud.

Reduces losses from dishonoured cheques.

Reduces cash holdings.

Is easier and safer than paper-based credit card processing.

Increases the likelihood of a sale (impulse spending).

Benefits for a customer

Provides a safe, fast alternative to carrying cash.

Reduces the number of transactions required to obtain cash.

Is convenient and easy to use.

Electronic banking

Many organisations now pay accounts using electronic banking facilities. Organisations submit data containing payment instructions on diskette, nine-track magnetic tape or by secure modem transfer to their bank. The bank processes the data. Files are then presented to other financial institutions (usually during the night) and cleared funds are available in the recipient’s account the next day.

This is a fast, efficient and inexpensive way for a computerised organisation to pay accounts. For the person or organisation receiving the money, payments received electronically have similar benefits to those listed above for EFTPOS.

Transactions received electronically are identified on the monthly statement received from the bank. Codes for the various types of deposits are indicated on the statement.

Many banks have a system of telephone banking for their customers, allowing them to pay accounts and transfer funds from one account to another by telephone. Some banks now have Internet services. These services allow people to transfer funds between accounts, pay regular accounts to certain institutions, review transactions and order statements from their home computer.

Night safe

Banks provide a night safe service for use by customers. Deposits are prepared in the normal way and placed in the safe outside the bank building. Most banks close at 4.00 pm Monday to Friday. By using the night safe an organisation can prepare the bank deposit at the close of training. This practice removes all funds from the premises overnight, reducing possible loss in the event of robbery or some other disaster.

Bank staff will process the deposit on the next working day.
Cash, cheques and credit cards are listed in banking forms in accordance with the banking institution’s guidelines

All banks produce their own deposit forms or slips. These are often encoded (printed) with the customer’s name and account number, as well as the Bank and Branch and BSB (Bank, State, Branch) number. The size of the book is determined by the number of cheques the business is likely to deposit within a reasonable time period. Most business deposit books are designed so that a duplicate (carbon) copy of the deposit is left in the book. Smaller businesses will have a deposit book with a butt (similar to a cheque book) which is the organisation’s record of the deposit.

While each bank’s deposit slip looks slightly different, each requires the following information:

Name of the bank, the branch and the BSB number.

Name of the depositor/account holder and the account number.

Date of deposit.

Total of coin/notes/cash.

Total of credit card transactions/Merchant summary.

A listing of the cheques showing drawer, bank and branch of each cheque.

Total number of cheques.

Total value of the deposit (cash, credit and cheque transactions).

Signature of the person depositing/preparing the deposit slip.

Space for the teller’s signature, the number of cheques and other information for bank use only.