Process for Accounting and Documenting Payments received as Cheques or DDs

We accept payments in several different forms like Cash, Credit Card, Paypal, Cheque or DD. Of these when we receive payments in either Cheque or DD the amount gets debited to our account only once the instruments are deposited in our bank account and the bank clears the amount in the clearinghouse and debits the amount to our bank account. Until this happens the payment against the sale/service is not considered as complete. In order to track this we use a Cheque/DD Register.

It is the responsibility of the Accounts-in-charge to manage and maintain this register. He/She will have to track the instruments that have been deposited to the bank account and confirm that they have been cleared and also track clearing charges if any.

While receiving a cheque/DD from the customer he/she must ensure that the receipt has all the details about the cheque/DD like Cheque/DD number, Cheque/DD date, Cheque/DD Drawee Branch and Drawing Branch and the amount. These details must also be entered into the Cheque/DD register. When the Cheque/DD is sent to be deposited to the company account this information should be recorded in the register with the date on which it was done.

Afterwards the bank account statement should be tallied to verify that the Cheques/DDs have indeed been cleared. In addition the accounts person should also confirm the service charges, if any, that have been charged by the bank. The date on which the amount was cleared and the charges associated should be recorded in the Cheque/DD register. If any cheques have bounced then immediate action should be initiated by the accounts in charge.