BUSINESS TRANSACTIONS

BUSINESS TRANSACTION:
Business transactions are the interactions between businesses and their customers, vendors and others with whom they do business. Transactions can be very simple, like buying a newspaper, or extremely complex, taking a long time and involving many companies or agencies. New technologies and management approaches are developing around the management of business transactions.

Definition

The accounting definition of a business transaction, according to the online Business Dictionary, is "an economic event that initiates the accounting process of recording it in a company's accounting system." This is the official definition. However, selling an item at a garage sale where no accounting system is in place also can be a business transaction.

Simple Transactions

Some transactions are simple exchanges. Paying two dollars for a cup of coffee is a business transaction. Getting a haircut, eating at a restaurant, even buying something expensive like a washer or dryer can be a simple transaction. Most simple transactions are singular events which may or may not be repeated and take place between a vendor and a customer.

Complex Transactions

Many transactions are complex. Purchasing an item with credit involves a series of transactions before the purchase can be completed. Setting up a vacation through a travel agency requires booking hotels, flights, possibly rail or boat travel, tours and making other arrangements, all of which require business transactions. Getting a mortgage to buy a home or building requires numerous transactions with the lender, title company, real estate agency, buyer, seller, loan underwriter and more.

Ongoing Transactions

Some business transactions are ongoing. Your relationship with your bank is an ongoing business transaction that may encompass multiple types of transactions. A contract between a supplier or vendor and another business can involve multiple business transactions between the vendor, its employees, its suppliers, its customer and the customer's market. There are also international transactions between countries; a loan from one government to another or a sales of goods and services could become an extremely complex ongoing transaction.