Every business transaction produces business documents that serve as written evidence. These documents must be kept in an orderly way for reference, tax calculation and preparing accounts.
Documents for buying and selling
- Quotation — states the price of goods before the buyer places an order.
- Purchase order — the buyer's formal request to buy goods from a supplier.
- Invoice — a document demanding payment from the buyer for goods bought on credit.
- Delivery order — accompanies the goods to confirm they have been delivered.
Documents for payment and adjustment
- Receipt — proof that payment has been received.
- Credit note — issued when goods are returned or a charge is reduced.
- Debit note — issued when there is an extra charge or an undercharge.
Example
A shop buys 20 cartons of milk. The supplier delivers the goods with a delivery order, then sends an invoice for RM600. After the shop pays, the supplier issues a receipt as proof of payment.
Remember
An invoice demands payment, while a receipt confirms payment has been received. Do not confuse the two.
Two more important documents are the statement of account and the payment voucher. A statement of account is a summary of all transactions with a customer over a period, including the balance still owing. A payment voucher records a payment made by the business together with the related approval. Each of these documents supports the entries in the account books and serves as evidence should a dispute arise.
Keeping documents neatly lets a business trace transactions, settle disputes and prepare financial statements accurately. Complete records are also important during an audit or a tax check by LHDN.