How Important is Proof of Transaction? Learn Here!

Transaction proof is crucial for business practitioners who often make purchases for operational needs to run a business. But do you often request proof of purchases for transactions already made?

While for some people, transaction proofs are just ordinary receipts without value, for business practitioners, these proofs can strengthen financial reports for each business activity. This article will discuss what transaction proof is, its purpose, benefits, and types.

Understanding Transaction Proof

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Simply put, transaction proof is a document that indicates a transaction has occurred and serves as evidence of one party's responsibility to another. It encompasses activities that individuals or groups undertake that can affect financial assets. For example, selling assets, paying bills, buying goods, or meeting daily needs.

In a company, financial transaction recording is a periodic activity, such as recording purchases of goods, paying salaries, and so on. In accounting terms, recording financial transactions is fundamental and must be implemented.

With structured financial records, all types of company financial transactions can be accounted for in financial statements. Financial transactions have a significant impact on the financial condition of a company or organization. With transaction proofs, you can easily reconcile the values of transactions recorded in your business's financial records.

The Purpose of Transaction Proof

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Recording financial transactions in the form of transaction proofs serves various purposes for companies or business units, including:

• Providing more detailed and specific information about changes in business financial resources resulting from business activities known as transactions.
• Providing comprehensive information related to reliable business financial reports to financial report users.
• Providing extensive information related to financial resources, capital, and various obligations that must be paid.
• Avoid misunderstandings about business financial record keeping; therefore, all transaction proofs must be kept very carefully.
• Providing financial information that can directly assist companies in estimating business potential and expected profits.

Benefits of Transaction Proof

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In addition to having specific purposes, recording transaction proofs also has functions and benefits for business systems, such as:

• Known by parties responsible for transactions that have occurred.
• Avoiding duplication of company financial data collection.
• Becoming the right medium for collecting financial information data.
• Minimizing the possibility of errors in financial record keeping.
• Serving as the basis for financial accounting recording.

Knowing the Types of Transaction Proof

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So, now you have an idea from the explanation of what transaction proof is, its benefits, and its purposes. But it continues; you should know that there are many types of transaction proofs. Here are some examples you've probably encountered:

• Memo: Contains brief, clear, and easily understood writing, usually only a few lines. Memos fall into the category of external evidence.
• Credit note: A document that can be used by someone to prove a reduction in debt within a company. This reduction in receivables is due to the return of goods or a price decrease.
• Debit note: Falls into transaction proof showing a request for a price reduction from the seller or contains information about the return of unsuitable goods.
• Cash memo: Proof of a transaction or document of payment issued by the seller to buyers based on cash sales.
• Invoice: A written document about products sold, including quantity and price. Making invoices is relatively easy. Typically, sellers issue invoices to buyers.
• Receipt: Falls into various types of transaction proofs issued when receiving a sum of money. It serves as proof of receipt and the amount of money received.
• Check: This transaction proof is an order for payment made by the account holder at a specific bank, intending for the bank to pay a specified amount written on the check.
• Promissory note: A document containing an order to transfer a certain amount of money from the account of a specific bank customer to the recipient's account, whether from the same bank or a different one.
• Bank deposit slip: This transaction proof falls into transaction records like deposit slips provided by the bank, which will be used for money deposits to the bank, such as investments or savings.
• Bank statement: A record of cash transactions in the bank and compiled in detail for delivery to bank customers.

Those are some information about the importance of transaction proofs you need to know. For business owners, implementing a system for recording company financial transactions is essential. Now, many companies offer business transaction recording system applications. 

ESB can be one of the recommended choices for your business. With its ESB Core (ERP) service, ESB supports the use of invoice services. Therefore, by using ESB services, your business can efficiently realize the purchasing process, reduce the risk of significant fraud, and avoid losses due to unrecorded purchases. For more information, please visit the ESB website!