Money was taken from the cash register and deposited into the bank. The total money of the business did not change; it only changed location. This movement is neither income nor an expense.
Despite this, such movements are recorded incorrectly in many businesses. When the cash outflow is processed as an "expense" and the bank inflow as "income", both turnover and expenses become inflated.
The transfer entry (virman) meets this exact need. In this article, we explained what a transfer is, in which situations it is used, and common mistakes.
Table of Contents
What is a transfer (virman)?
A transfer is a slip recording the transfer from one account to another. It does not change the total assets of the business; it only changes where the asset is held.
This is an important distinction in terms of accounting. Income and expense statements should not be affected by transfers; otherwise, the true performance of the business becomes obscured.
In practice, a transfer produces two entries: an outflow in one account and an inflow in the other. Since both entries are linked to the same slip, they cannot be separated from each other.
This link is valuable for subsequent control. Whether the money leaving the cash register actually entered the bank can be verified from a single record.
Having account definitions set up correctly is a prerequisite here; cash and bank definitions we covered this setup in the article.
Types of transfers
From cash to bank. This is the most common scenario. Depositing end-of-day collections into the bank is tracked with this entry.
From bank to cash. Withdrawing money from the account for cash needs. It is regularly seen in retail and field operations.
Between bank accounts. Transfers made between accounts at different banks. Used to gather cash into the correct account according to the payment plan.
Between cash registers. Transfers made from a branch cash register to the central cash register. Recording this movement is critical in multi-branch structures.
Between companies. Money movements between group companies. Such records require special attention; scope separation is provided by the multi-company model.
How to issue a transfer slip?
Two accounts are selected on the slip: the account from which the money leaves and the account it enters. Then, the amount, date, and description are entered.
The date field requires attention. The day cash is withdrawn from the register may differ from the day it is deposited into the bank; in this case, using two separate dates may be necessary.
The description field should not be left blank. A short note such as "end-of-day deposit" or "branch transfer" makes the record meaningful months later.
If a fee is deducted on the bank side, this amount is also recorded as an expense. The difference between the transfer amount and the amount credited to the account equals the fee.
The transfer slip is entered using the same screen logic as other financial slips; standard document entry ensures the team does not have to learn a separate system.
Foreign currency transfer and exchange rate difference
Transfers made between accounts in different currencies are the most meticulous type of transfer. A currency transaction also takes place here.
For example, when transferring from a USD account to a TRY account, the outgoing amount is in USD and the incoming amount is in TRY. The exchange rate determines the relationship between them.
The exchange rate used must be the actual rate applied by the bank. The difference between the central bank rate and the bank's rate creates a variance in the record.
The exchange rate difference arising from this transaction is recorded as income or expense. You need to clarify the accounting method with your financial advisor.
Keeping foreign currency accounts in their own currency facilitates these records; this is especially important for businesses that export. e-Export invoice We touched upon the exchange rate side in the article.
Transfer between current accounts
Virman is not only used between cash and bank. Balance transfers may also be required between current accounts.
The most common scenario is working with two different companies of the same group. A receivable from one company can be offset against your debt to the other.
Another scenario is companies that are both customers and suppliers. Receivable and debt balances can be offset against each other; this is a correction made without cash movement.
Reconciliation is especially important in such entries. The other party must also have made the same offset; otherwise, balances will diverge. Current account reconciliation you can check the article.
Supporting offsetting transactions with written reconciliation prevents subsequent disputes.
Common mistakes
Recording a virman as income or expense. This is the most common mistake. Turnover gets inflated, expenses get inflated, and periodic reports become meaningless.
One-sided entry. Cash out is recorded, but bank in is forgotten. This messes up both cash and bank balances.
Skipping the bank fee. When the fee is not recorded, the bank balance does not match the statement, and a discrepancy arises in the monthly reconciliation.
Not tracking money in transit. The amount that left the cash register but has not yet been credited to the account is an intermediate state and must be monitored.
Confusing with personal accounts. Transferring business money to a partner's account is not a virman; this is a separate accounting transaction and should be discussed with your financial advisor.
Authorization and control
A virman is a transaction that generates money movement; therefore, its authorization must be done carefully.
Allowing everyone to make transfers between accounts creates both operational confusion and audit risk. Authorization should be given to a narrow group.
Requiring approval for virmans above a certain amount can also be considered. This is an appropriate control, especially for intercompany transfers.
Keeping logs of virman records provides subsequent queryability; audit trail we discussed this structure in the article.
How to establish the separation of duties sensitive transaction authorizations we explained in the article. Transfer slips in the finance module are issued.
Frequently asked questions
Does a transfer affect the endorsement?
No. When recorded correctly, it does not enter the income and expense tables; it only changes account balances.
Can it be generated automatically from the bank statement?
Transfers between your own accounts can be recognized by the rule engine; bank integration see the article.
How to correct an incorrectly issued transfer?
Creating a reversal entry is safer than deleting; the history remains traceable.
Is a transfer from the branch cash register to the headquarters considered a transfer?
If it is within the same company, yes. If it is between different legal entities, it is treated as a current account transaction.
Transfer is a simple but frequently misused type of record. When used correctly, both reports stay clean and the location of the money can be seen at any time.
The habit that brings the most benefit in practice is recording every inter-account movement on the same day. When the money leaving the cash register at the end of the day is recorded the next day, the balances of both days appear incorrect.
A significant portion of the discrepancies in monthly bank reconciliations also stems from missing or late-entered transfers; turning this check into a routine solves the problem before it grows.
By consulting with the EQLEM team you can plan your account structure and transfer setup.