What is a Memorandum Voucher?

How Memorandum Vouchers Differ from Regular Vouchers

Here is the difference between a memorandum and regular vouchers in a tabular format.

When to Use a Memorandum Voucher

Memorandum vouchers come in handy in various business scenarios, such as:

• Uncertain Expenses – If a company expects an expense but is unsure about the exact amount, it can use a memorandum voucher.
• Internal Adjustments – Used to track inter-departmental adjustments that are yet to be finalized.
• Provisional Entries – When payments or receipts are expected but not yet confirmed.
• Goods Sent on Approval – If a business sends goods to a customer on an approval basis, the transaction is recorded as a memorandum voucher until confirmed.
• Unpaid Salaries or Commissions – If employee salaries or commissions are pending confirmation, a memorandum voucher can be used to keep a record.

Read More – Audit Trail Applicability: Date, Turnover Limit, Penalty, Best Practices, Example

Benefits of Using Memorandum Vouchers

1. Prevents Missing Transactions – Ensures that transactions that require verification are not forgotten.
2. Facilitates Better Decision-Making – Helps management make informed financial decisions by keeping track of pending expenses and incomes.
3. Improves Accuracy in Accounting – Reduces the chances of errors and incorrect entries in final books.
4. Useful for Internal Control – Helps businesses manage internal transactions before making permanent accounting entries.
5. Helps in Budget Planning – Provides insights into expected financial obligations.

Read Related – Accounting Principles

Best Practices for Managing Memorandum Vouchers

To use memorandum vouchers effectively, follow these best practices:

1. Clearly Label Transactions – Mention details such as the reason for recording the transaction and the expected resolution date.
2. Regularly Review and Update – Periodically check memorandum vouchers and convert them into regular vouchers once transactions are confirmed.
3. Ensure Proper Documentation – Attach necessary documents (like invoices, emails, or approvals) to support the entry.
4. Assign Responsibilities – Designate team members to follow up on memorandum vouchers to ensure they are addressed on time.
5. Use Accounting Software – Many modern accounting tools, like BUSY, allow the recording of memorandum vouchers, making tracking easier.

Memorandum vouchers are an essential tool for SMBs to maintain an organized accounting software. They are temporary placeholders for uncertain transactions, helping businesses track pending expenses, avoid missed entries, and maintain financial accuracy. By effectively managing memorandum vouchers, SMBs can ensure a smoother accounting process and better financial decision-making.