Let us tell you What is reverse current account? The running of a business certainly cannot be separated from the sale and purchase transactions. Talking about this transaction clearly involves money as a means of payment. However, each transaction is not always paid for with currency, especially if the transaction value is large.
Each financial transaction may not involve cash
Certainly it would be very troublesome if the transaction value of hundreds of millions and even billions paid with cash. Besides being complicated, it is also not practical and effective.
Demand deposits in 2020-2021
Then what about payment transactions with large values? Today’s modern financial industry has many solutions. One of them is using demand deposits in the form of checks. For this reason, business people must have a checking account at a bank.
What is Backward cheque?
Disbursement of current accounts can be done at any time. Even checks or current accounts support for payment of transactions in large amounts. One type that is often used is a backward check or cheque. So before telling you about reverse current account you may need to know about backward cheque.
A withdrawal demand deposit
A withdrawal demand deposit is a letter or letter containing an unconditional order from the customer at the bank to pay the amount of money contained therein to the person who carries it according to the due date stated on the letter. A withdrawal check can also be understood as a check or check received, but withdrawals can only be made after the due date is determined.
Current account as non-cash instrument
In a simpler definition, a current account is defined as a security that is used as a non-cash payment instrument, which has a due date for withdrawal from the date of issue.
For example, the transaction was carried out on July 5, 2020. Payment for the transaction was carried out using a current account. Here the buyer issues a demand deposit on July 6, 2020, but a check or check letter is written on July 23, 2020.That is, before July 23, 2020, the seller has not been able to withdraw the demand deposit.
In other words, the seller will receive payment for the transaction that occurred on August 23, 2020. This is what is called a demand deposit. At least he has a conformation that on the given date the amount will be transferred in his account by a baking channel.
Current account is legitimate means of payment
In business transactions, the use of a current account as a means of payment is legitimate. With notes, there is an agreement between the two parties namely the seller as the recipient and the buyer as the giro backs off.
No need to carry out cash for huge transactions
Many business people choose to use current accounts in transactions. The reason is simple, which is easier and more practical because there is no need to carry large amounts of cash. Not only that, the use of current accounts is also possible that there are not enough funds available at the time of the transaction.
Current accounts backwards in financial statements
Every business transaction must be recorded in the financial statements. The treatment of a current account as a receipt is clearly different from cash, where cash will automatically be added or deducted but this is not the case with a current account.
Who is a buyer and seller?
A withdrawal demand deposit is considered as a receivable from the side of the recipient, because the recipient has not received payment in real terms. Meanwhile, from the side of the party giving it, it is considered as debt, because the giver has not made real payments.
Recording in Journal
Receipt of withdrawal is recorded twice in the journal, namely when the goods are sent and the maturity of the withdrawal demand. Before a withdrawal is accepted, it is generally preceded by billing, in which the seller issues an invoice or bill which is then billed to the buyer.
After receiving an invoice from the seller, the buyer immediately issues a demand deposit so that the goods that are the object of the transaction can be sent immediately by the seller. It is a convenient mode of payment and it can make the process of business fast.