Cheque requisition

Cheque requisition - this form is used to raise the cheque/ remittance advice when no goods are involved but legitimate expenses need to be paid. These expenses are usually services that are not contracted for, such as council and water rates, electricity, gas and service contracts, and that require annual or regular payments. The cheque requisition is also the source document used for cash advances from the cashier for travelling or accommodation expenses.

Documentary evidence of the reason for a payment, and the amount of the payment, are usually provided by a supplier's invoice. There will be some occasions, however, when a payment by cheque is required to pay for an item without evidence:

• the invoice has not yet been received, and although an invoice/receipt will follow later, payment is required now
• there will be neither an invoice, nor a receipt

The documentary evidence of the reason for and the amount of the payment can be obtained from the person who wants the payment to be made, by asking him or her to fill in a cheque requisition form.

Preparing a cheque requisition form

This is what should be done when preparing a cheque requisition form.

Action	Comment
The form must be signed by a person who can authorise the payment	This might be the advertising manager personally or his/her superior
The general ledger code is needed to record the payment in the accounts	A code will be written on the either by the advertising manager or by someone in the accounts department
Supporting documentation should be attached	In this case the fax requesting payment
The cheque, when it has been prepared and signed, will be sent to the person authorising payment	This will be the advertising manager. In some organisations, the accounts department will only send the cheque to the payee direct
An invoice/receipt may follow	Some organisations may insist on this

You might wonder what payments could possibly be made where an invoice or receipt will not be obtained eventually. There are few such cases: in many countries limited liability companies have to pay an annual legal free to the government. A receipt or invoice may not be provided for this.

Cheque Requisition Slip

Cheque Requisition Slip is a very important document as banks are issuing cheque book on receiving the same form their customers. In a number of frauds it was observed that the fraudsters got the cheque books issued from the banks after acquiring the cheque requisition slips of their customers and then fraudulently withdrew money. It is therefore necessary to protect and ensure the safekeeping of the cheque requisition slip. So whenever one gets a new cheque book it is very important to check that the cheque requisition slip is available in the cheque book. In case the cheque requisition slip is not available one must inform the bank immediately by email and also in writing.

Examples of Cheque requisition

• A university student applying for a cheque requisition to cover the cost of their tuition fees
• A business owner applying for a cheque requisition to cover the cost of their project materials
• A government agency applying for a cheque requisition to cover the cost of their employee salaries
• A charity organization applying for a cheque requisition to cover the cost of their medical supplies

Advantages of Cheque requisition

Cheque requisition is a form used to raise a cheque/ remittance advice when no goods are involved but legitimate expenses need to be paid. The advantages of using cheque requisition include:

• It is a convenient way to pay for the services that are not contracted for, such as council and water rates, electricity, gas and service contracts.
• It provides an easy and efficient way to pay bills, as the cheque requisition can be filled in quickly and accurately.
• It provides a secure way of payment, as the cheque requisition is processed through the banks and hence the payment is tracked and monitored.
• It is secure and safe, as the cheque requisition is processed with the banks, which ensures that the payment is secure and safe from potential frauds.
• It helps to ensure accuracy in the payment of bills, as the cheque requisition is filled in accurately and with the right information.
• It is a cost-effective way to pay for services, as the cost of processing the cheque requisition is usually lower than other methods of payment.

Limitations of Cheque requisition

• Cheque requisitions are limited in terms of the amount of money that can be requested. Typically, the amount of money requested must be within the budget allocated to the department requesting the funds.
• Cheque requisitions are limited in terms of the types of expenses that can be requested. For example, they cannot be used to pay for capital expenditure or to purchase assets.
• Cheque requisitions are limited in terms of the time frame in which they must be completed. Most must be completed within a specified period of time in order to be valid.
• Cheque requisitions are limited in terms of the documentation that must be provided in order to be approved. For example, typically, invoices and other proof of purchase must be provided in order to be approved.
• Cheque requisitions are limited in terms of the people who can approve them. Typically, the requisitions must be approved by the head of the department or other senior manager.

Other approaches related to Cheque requisition

Introduction: Apart from Cheque requisition, other approaches for raising remittance advice when no goods are involved are:

• Banker's order - This is an instruction given to a bank to make payments of a fixed amount at regular intervals. It is usually used for making regular payments such as rent, mortgage payments and insurance premiums.
• Standing order - This is a payment instruction given to the bank by the customer which requires the bank to make payments of a fixed amount at regular intervals. It is usually used for making payments such as salaries, rent, mortgages and utility bills.
• Direct debit - This is an instruction given to a bank by a customer to allow a third party to collect a sum of money from the customer's account at regular intervals. It is usually used for making payments such as gym memberships, subscriptions and utility bills.
• Online payment - This is an electronic payment system which allows customers to make payments online using a debit or credit card. It is usually used for making payments such as online purchases, subscription payments and utility bills.
• Electronic Funds Transfer (EFT) - This is an electronic payment system which allows customers to transfer funds to another account electronically. It is usually used for making payments such as rent, mortgage payments and utility bills.

Summary: In addition to Cheque requisition, other approaches for raising remittance advice when no goods are involved are Banker's order, Standing order, Direct debit, Online payment and Electronic Funds Transfer (EFT). These approaches are used for making payments such as rent, mortgage payments, subscription payments, utility bills and online purchases.

Footnotes

Cheque requisition — recommended articles

Debit Note — Positive pay — Purchase ledger — Cash voucher — Signature card — Void Transaction — Documents against acceptance — Certificate for payment — Purchase invoice

References

• FIA Recording Financial Transactions, (2013), BPP Learning Media, London.
• FIA Recording Financial Transactions, (2017), BPP Learning Media, London.
• Mehta K., (2016), Fence the Fraud: A practical guide To Prevent Bank Frauds, Notion Press, Chennai.
• Trenerry A., (1998), Principles of Internal Control, UNSW Press, Sydney.

Author: Małgorzata Oleksińska