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Receipt and Payment Accounting for Parish Councils

by 
Hannah Driver
· Updated
Jan 30, 2023

Receipts and Payments Accounting

Receipts and Payments accounting is a method of accounting used by local (parish, town and community) councils. This method is also known as the cash-based accounting method.

Under this method, transactions are recorded based on the flow of cash in and out of the council's accounts. Receipts are recorded when income is received, and payments are recorded as they are made. This method records transactions as they happen, regardless of when they relate to.  This can therefore give a less accurate financial picture as it does not take into account the timing of payments and receipts.

The Receipts and Payments method is used by many smaller councils in the UK as it is simple and straightforward to use, and provides a basic level of financial information. However, once a council has exceeded the threshold of £200,000 income or expenditure (or both) for three consecutive years the more sophisticated method of Income and Expenditure accounting is mandatory.   This is also known as the accrual-based accounting method, and provides a more comprehensive view of the council's financial position.  Smaller councils under the mandatory threshold can opt to complete their year end accounts in Income and Expenditure however and often do so when the clerk/RFO or councillors have a financial background.

Advantages of Receipts and Payments include:

  1. Simplicity: This method is relatively simple to understand and implement, making it ideal for small councils with limited resources.
  2. Real-time tracking: With receipts and payments, it is possible to track the cash inflows and outflows in real-time, providing a clear picture of the council's cash position at any given time.
  3. Cost-effective: The receipts and payments based accounting system is less expensive to implement than other accounting methods, as it doesn't require specialised software or a large team of accountants.


Overall, the receipts and payments based accounting system is well-suited to small organisations, such as parish councils, that have limited resources and do not require a high level of detail or analysis of their financial information. 

Unsure where you stand? Please check Income & Expenditure VS Receipts & Payments For Council Accounts

What are Payments?

Payments refer to the financial transactions that involve the transfer of money from one party to another. In the context of a parish council, payments may include expenses such as:

  • Staff salaries and benefits
  • Utility bills such as electricity, gas, and water
  • Materials and equipment for maintenance and construction projects
  • Contracts or services provided by third-party vendors or consultants
  • Insurance and legal fees
  • Travel and training expenses for council members

Payments can be made in various forms, such as cash, cheque, electronic funds transfer, and credit card. Keeping track of payments is important for a parish council to manage its finances effectively, and to ensure that it has enough money available to meet its ongoing expenses and fund new projects.

Payments within Scribe Accounts

Scribe Accounts has a specific transaction type called Payments, which supports standard details about your transaction, along with details specific to parish and town council, such as:

  • S.137
  • Payment Authorisation
  • Power Used for Spend

The transactions will also be conveniently fed into the Annual Governance & Accountability Return (AGAR).

What are Receipts?

In the context of receipts and payments, receipts refers to income received by the organisation. For parish and town councils, receipts may include:

  • The precept
  • Fees for services provided by the council, such as hall rentals, allotments, cemetery and carparks
  • Grants or other forms of funding received from external sources
  • Bank interest
  • VAT refunds

Receipts should be recorded accurately and in a timely manner along with the payments in the council’s cashbook.

Receipts within Scribe Accounts

Scribe Accounts has a specific transaction type called receipts, which supports standard details about your transaction, along with details specific to parish and town council, such as payment & minute references.  

The transactions will also be conveniently fed into the Annual Governance & Accountability Return (AGAR).

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