The only difference between cash and credit transactions is
the timing of the payment. A cash transaction is a transaction
where payment is settled immediately and that transaction is
recorded in your nominal ledger. The payment for a credit
transaction is settled at a later date. Try not to think about
cash and credit transactions in terms of how they were paid, but
rather when they were paid. For example, you may buy some
groceries at your local shop and pay for them in cash there and
then, and that’s a cash transaction.
However, what
if you paid by card rather than cash? That will also be
classified as a cash transaction because you paid immediately.
Credit transactions are paid after the exchange of goods or
services takes place and usually after an invoice for the
transaction is issued. So those businesses with a greater number
of credit transactions will need to know how to write an
invoice. The time taken before payment can vary depending on the
types of businesses or even the industry in which the
transaction occurs. Once again, when payment is finally settled
for the invoice, it may be done with cash, card, or any other
payment method, but it is still a credit transaction. ()
