What is proof of transaction, and why does it matter for businesses?

Definition of proof of transaction

A transaction record is a document that proves a financial transaction between two or more parties. The details of the transaction are recorded and documented, with each party usually holding a copy.

Generally, this document contains the following information:

• Date and transaction number
• Parties involved in the transaction
• Goods and services in the transaction
• Payment amount for the transaction

In addition to this core information, the document may also contain other data deemed necessary, such as the payment method, the terms and conditions and the signatures of the individual parties.

Transaction statements have been around for a long time and continue to be an important part of financial accounting. Over time, its format can vary and become either a physical or electronic document.

One of the benefits of the transaction statement is that it is a tool for recording a company’s financial data. This document helps to prevent the duplication and manipulation of data. A clear proof of transaction minimizes errors in the recording by the company.

Why business should record transactions?

Proof of transaction 

The first function of the proof of transaction is to prove that a transaction has actually taken place. This document can serve as meaningful and valid proof for various transactions, such as purchases, sales and cash receipts.

Some examples of transaction receipts that you can record are cash receipts, cash payments and bank deposit slips.

Financial tracking tool 

The next function of the transaction record is a business financial tracking tool. With this document, you can track where the company’s money goes and where it comes from.

This makes it easier to manage the company’s total income and expenses. You can also regularly monitor the company’s financial situation and make it easier to manage the company.

Basis for accounting records 

A company's financial management is closely linked to organized accounting records. Complete transaction documents make it easier to record the company’s bookkeeping, from journal entries and general ledgers to the preparation of financial reports.

Tax requirements 

Another important function of transaction evidence is the requirement for tax reporting. Well-documented transactions simplify the tax reporting process for your company.

Types of transaction proofs

Here are some types of transaction evidence for businesses.

Internal transaction record

The first type is the internal transaction record, which is a document that records a transaction within the company. The record of this transaction usually relates to internal business activities.

Examples of internal transaction records include employee payroll records, stock transfer notes and records of asset transfers.

External transaction record 

The next type of transaction record is the external transaction record. As the name suggests, this document records a company’s transactions with external parties. For example, product sales, payments received, purchases of office inventory and debt payments.

Sales transaction statement 

The third type of transaction statement is the sales transaction statement. This document shows that a sale has taken place, whether in the form of goods or services. This proof serves as the basis for the company’s records and supplements the sales figures and incoming revenue.

Proof of purchase transactions 

In addition to sales, there is also proof of purchase transactions for goods or services. This document is usually kept by the buyer. Its recording can increase assets (if goods are involved) and show the outflow of money.

Proof of receipt 

Another type of proof of transaction is proof of receipt of money or funds. This document serves as proof of incoming cash, such as incoming payments, bank loans and investor capital.

Proof of disbursement 

The last type of proof of transaction is the proof of disbursement of cash or funds. This document serves as proof of cash outflows, such as payments for production materials, employee salaries and the settlement of debts.

7 Examples of proof of transaction in Indonesia

In Indonesia, various forms of proof of transaction are commonly used by the public, such as the following.

Invoice 

The first example is an invoice, a document used to request payment. The invoice is issued by the seller to request payment from the buyer. The document records the details of the transaction for goods or services.

The format of an invoice can vary, but it usually contains the following information:

• Name of the seller and the buyer
• Date of the transaction
• Goods and services purchased
• Quantity of goods purchased
• Price of goods or services and total amount
• Tax (if applicable)
• Payment method (if applicable)
• Additional terms and conditions (if applicable)

There are usually two types of invoices, which are sales and purchase invoices. A sales invoice is created by the seller to record the sales transactions received from the buyer. A purchase invoice, on the other hand, is created by the buyer to record the purchase transactions from the seller.

Receipt 

Another example of a proof of transaction is a receipt. The receipt is given to the person making the payment as proof of receipt of the money. It can be used for the purchase of goods and more, such as rent payments or the settlement of debts.

A receipt usually contains the following information:

• Name of the payer
• Name of the recipient
• Amount received
• Purpose of the transaction
• Date of the transaction
• Signature of the recipient

In recent years, businesses have become more comfortable with using electronic receipts as they can be easily made. You have probably already received this type of receipt after making a purchase in a store or mini-market. This document is usually printed directly from the checkout machine in the form of a small piece of paper after the transaction has been completed.

Note 

Compared to the previous examples, a note contains simpler transaction data, in particular invoices and sales invoices. This document is usually used for cash transactions with small amounts.

There are different types of notes, namely cash notes, debit notes and credit notes. 

A cash note records cash transactions and is often used for everyday transactions, such as shopping at the market. A debit note is a document that reduces the buyer’s debt to the seller while a credit note documents the return of goods and becomes the buyer’s receivable.

Check 

The next example is a check, a document issued by a bank that contains a customer’s order to transfer a certain amount of money. The bank will transfer the money to the recipient named on the check.

The usual information on a check includes the name of the sender and the recipient, the transaction date and the amount of money transferred.

Account statement 

Another example of a proof of transaction issued by a bank is an account statement. A bank statement contains the history of incoming and outgoing funds in a bank account. You can track the movement of money in a bank account over a period of time.

Tips for organizing transaction statements for business

From this article, you may have understood how important transaction records are for business. These documents must be properly stored and organized to facilitate financial recording.

However, sometimes the organization of transaction records and other financial documents involves additional work. The documents are often scattered, making it difficult to create reports.

To avoid this, make sure you organize your financial documents properly. Here are some tips to help you organize your transaction statements properly.

Categorize transaction receipts 

The first tip you can apply is to collect and categorize all transaction receipts. Divide the documents into classifications based on your business’s record-keeping requirements.

For example, categorize them into monthly expenses, routine receipts and scheduled payments. This makes it easier when you need to check the necessary data and create financial reports.

Record important information 

After categorizing the documents, the next step is to record important information about each transaction. This includes the transaction date, the name of the seller or service provider, a description of the goods and services and the amount.

Securely store proof of transaction 

Once the transaction details have been recorded, your task is not yet complete. Make sure you keep the proof of transaction in a safe place. This will make it easier if you need to check it later and anticipate any potential problems.

Use Aspire for fast, secure and easy transaction verification process

To organize transaction details more clearly, you can use a financial solution that allows you to recap transactions faster and is easy to use. For this, Aspire can be the right answer to manage your business’s financial transactions.

With Aspire, you can automatically recapitulate transaction records and integrate these data with accounting software, making the process of record-keeping and financial reporting easier.

As an all-in-one platform, Aspire supports your business in various aspects, including expense management, the ability to receive money from various methods, and international payments. You can also issue transaction statements such as invoices and sales invoices with just a few clicks.

Want to find out more about what Aspire can offer you? Contact our professional team now!