Transaction date

What it means

The transaction date is the day on which an accounting transaction is recorded in the books. The Accounting Act lists such days: for example, the day money is paid or received, the day goods are delivered or accepted, the day a receivable or payable arises, the day a shortage, damage or surplus is discovered, or the day other facts subject to accounting occur.

It is the practical expression of the accrual principle: a cost or income belongs to the period in which it arose, not when the invoice or money arrived. Goods delivered on 30 December are this year’s revenue even if the invoice is dated 5 January and paid in March.

The transaction date need not match the document date or the tax point for VAT, although they are often the same. On an invoice it appears as the date of supply, and for foreign currencies it determines the exchange rate used for translation.

How it works in practice

At year-end the transaction date is key. Invoices received in January for December are booked into the old year if we still can, or through estimated accruals if the document arrives after the books are closed. That way there is no gap between what happened in the year and what the result shows.

For foreign currency we use this date to pick the ECB or bank rate for converting into euros. If payment is made on a different day, the difference between the rate on the transaction date and on the payment date is an FX difference that goes to expenses or income.

We therefore advise clients always to show the actual date of supply on invoices rather than the issue date, and to check it on invoices received. For services provided over time, such as an annual subscription, the income or cost is spread over the relevant periods through accruals and deferrals.

What to watch out for

The most common mistake is booking by the date the invoice arrives. In ordinary months this only distorts monthly results, but at the turn of the year it shifts costs or income into the wrong period, changing the tax base and leading to reassessment in an audit.

Watch advance payments and proforma invoices too. Paying an advance is not the date of purchase, merely the payment of a prepayment. The cost arises only on delivery, so an advance invoice for goods delivered next year does not belong in this year’s expenses.