Business transactions are so important in the commercial world. Most essential activities are recorded through them, including the handling of money, the use of services, and the exchange of goods.
Besides that, business transactions are key to legal compliance. Accurate records of your business activities can show whether you’re adhering to the required laws and regulations.
But what if you need to prove that your business transactions are transparent and compliant? How can you ensure accountability? Written evidence is the answer!
In essence, written evidence provides clear, verifiable information about your business transactions in legal and financial contexts. With the right documentation, you can resolve disputes, maintain accurate financial records, ensure compliance, and prepare for potential audits.
This leads to the question: what counts as written evidence of a business transaction? Read on to find the answer!
Types of Written Evidence in Business Transactions
Are all your business transactions completed in a compliant way? Do you want to get a clear view of your financial records or prove your defenses in legal proceedings? Written evidence can be an invaluable resource.
But what can be used as written evidence of a business transaction? Many documents can be a source of information about the activities performed by your company, but these are the most common:
Contracts and Agreements
Did you use a formal document to outline the terms and conditions of a transaction between your company and another business? It can be used as written evidence!
Formal documents are often used to define the terms of a deal or agreement between multiple parties, including the rights, obligations, and responsibilities of each. Thus, these pieces of evidence can provide general information about the transaction, the conditions agreed upon, and any breaches of those terms.
Some examples of formal documents you can use as written evidence of a business transaction include the following:
- Sales contracts
- Service agreements
- Lease agreements
- Employment contracts
- Partnership agreements
- Non-disclosure agreements (NDAs)
- Non-compete agreements
Invoices and Bills
Invoices and bills are documents exchanged between a customer and a vendor.
Generally, invoices are given by sellers to buyers as payment requests and contain information about the products or services provided, such as the quantity or price and the payment terms.
Bills are similar but are used for smaller or recurring transactions, specifically to inform buyers about the amount owed for goods or services.
Receipts
These documents are used as proof of payments for goods or services and are usually given to buyers after they make a purchase.
Receipts include important details about transactions, such as the date, time, and amount paid, so they can be used as written evidence to share clear information about a business.
Bank Statements
Records of all financial transactions in a bank account, including deposits, withdrawals, and transfers, can be used as written evidence of a business transaction, too.
Bank statements provide a comprehensive overview of a company’s financial activity and can be used as written evidence in various legal and financial matters.
Purchase Orders
These are documents issued by a buyer to a seller requesting goods or services.
Purchase orders outline the specific items or services required, quantities, prices, and delivery terms, so they provide valuable information, too.
Delivery Receipts
These receipts are used to confirm that goods have been delivered. Providers whose services aren’t physical rely on them to prove that their work has been completed as requested. Consequently, such documents can serve as written evidence for a business transaction.
Emails and Correspondence
More often than not, written communications between parties involved in a business transaction represent written evidence. Emails, for example, document discussions – not your personal information, but key details about your business activities.
Other forms of correspondence can also provide key information about companies to build a picture of the context that led to some decisions or actions.
With these pieces of evidence, you may be able to track transactions. Plus, learning about a deal’s intent, agreement, or acceptance will be a walk in the park.
Journals
Journals are tools used to make accounting easier, so they can be a valuable source of information about your business transactions. There are two main types:
General Journal
A general journal is your business’s main accounting record. All of your company’s financial transactions are chronologically documented and listed in this book.
If you want to get a detailed view of your company’s activities, this register shows essential information, including the following:
- Date of the transaction
- Account debited
- Account credited
- Dollar amount
- Explanation of the transaction
- Parties involved
Special Journal
Similar to the general one, a special journal is a book that documents and lists all of your financial transactions, but such accounting records are specialized.
With a special journal, you can record your transactions more efficiently, categorizing them by type, amount, or purpose. For example, you can record information about sales transactions on debit and credit, purchases of inventory, cash receipts, payments, and more.
These are some common types:
- Sales journal
- Purchases journal
- Cash receipts journal
- Cash disbursements journal
The Importance of Written Evidence
Written evidence serves as a verifiable record of business transactions. These documents provide essential information on multiple aspects, such as the money you spent, whether you followed the California Consumer Privacy Act or similar regulations, how many items you sold or customers you had, and more.
In essence, written evidence acts as a safeguard against disputes, facilitates financial recordkeeping, and ensures compliance with legal and regulatory requirements.
With these documents, you can also obtain valuable information for analytics, which can be used to measure and improve your performance, define achievable goals, and set your company up for success.
Final Thoughts: Handling the Legal Aspects of Business Transactions
Business transactions are the center of your operations. Any document or piece of evidence that provides more information about them can be really valuable for your company, especially in the legal landscape.
Whether you’re facing a dispute or just want to prepare to avoid potential issues, the best thing you can do is contact professionals. A business transactions attorney in Hollywood, for example, will help you keep accurate records of your activities or gather strong written evidence in case of an audit or lawsuit. Get in touch with a reputable one as soon as possible!