Glossary · Also called Bank transfer
Credit transfer
Money moved straight into a business's bank account by a customer or the bank.
What it means
A direct payment into a bank account, often from a customer, appearing on the bank statement before the business records it.
Example
A customer pays RM900 by credit transfer; it shows on the statement but not yet in the cash book.
Why it matters
Because it often reaches the statement first, the cash book must be updated for it during reconciliation.
In practice
A credit transfer is money paid directly into the business bank account electronically, so it appears on the bank statement before it is in the cash book. In a bank reconciliation it is a classic item the business has not yet recorded. The bank knows about it before the bookkeeper does.
Suppose a customer settles an invoice of RM1,500 by electronic transfer. The bank credits the account. Until the business updates its cash book, the two balances disagree by RM1,500. To bring them into line, you debit the bank column in the cash book and credit the customer's account. Then you agree the amended balance to the statement.
Learners often confuse a credit transfer with a standing order or direct debit. The direction usually differs. A credit transfer brings money in from a payer. Direct debits and standing orders send money out to suppliers. Always check which side of the cash book each one affects.
If bank reconciliation adjustments confuse you, one of our teachers can drill the cash book updates with you until you can do them quickly. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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