The difference between a purchase and cash purchase in Pure Cash Tracker
Following up from our previous article covering the difference between sales and cash sales, we thought we would cover the similar differences between purchases and cash purchases in the Pure Cash Tracker app.
An invoice purchase, simply called a purchase in Pure Cash Tracker, is a type of purchase in which the buyer receives goods or services before paying for them. The supplier sends an invoice to the customer, outlining the details of the transaction, such as the items purchased, the price, and the due date for payment. The buyer then has a certain amount of time, usually defined on the invoice provided, to pay the amount owing in full.
When paying an outstanding purchase in Pure Cash Tracker, a payment needs to be created with the amount paid and allocated against the corresponding invoice in order to track any amounts that remain outstanding.
A cash purchase, on the other hand, is a type of purchase in which the buyer pays for the goods or services at the time of the transaction. This can be done with cash, a check, or a credit card, but the important thing is that the payment is made in full at the time of the purchase.
In Pure Cash Tracker when a cash purchase is created, the app creates both a purchase invoice and record of payment at the same time so that no amount remains outstanding in the app.
The main difference between the two different types of purchases in Pure Cash Tracker is the timing of payment. With an invoice purchase, the payment is due at a later date, whereas with a cash purchase, payment is made immediately.
Another difference between the two different types of purchases for small businesses is the level of trust required between the buyer and seller. With an invoice purchase, the supplier must trust that the payment for the goods or services will be made as promised, while with a cash purchase, the trust requirement is reduced as payment is made at the time of the transaction.
Some businesses may conduct credit checks prior to providing invoice purchases to ensure the buyer has the financial means to pay the invoice. This isn't the case with cash purchases as payment is made at the time of the transaction.