Business Transaction: Definition, Types & Analysis

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  • 0:02 What Is a Business…
  • 0:54 Types of Business Transactions
  • 1:36 Examples of Business…
  • 2:32 Lesson Summary
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Lesson Transcript
Instructor: Ashley Johns

Ashley has taught college business courses and has a master's degree in management.

This lesson looks at business transactions and offers a definition for them. We'll also go over types of business transactions and look at some examples.

What Is a Business Transaction?

When it comes to running a business, there are various ways to earn money. Some customers choose an item to purchase, pay with cash, and are never seen again. Others open credit cards with the company and return frequently. Businesses even have contracts with vendors for products and services provided.

Imagine you own a tire and lube shop. You would love to simply have each customer pay cash. However, the marketing department has explained to you that you need to give customers options and find ways to keep them loyal.

A business transaction occurs when goods, services, or money are passed between one person, business, account, etc. and another such entity. For example, this could be you going stopping to buy gas for your car. The transaction is you purchasing the gas from the gas station. There are three types of business transactions.

Types of Business Transactions

The type of business transaction you have with a customer goes hand in hand with the type of relationship you have. It could be short-term or long-term. It depends on what you offer the customer. Let's review each type.

Simple transactions are typically a singular transaction, which may or may not happen again, between a vendor and customer (e.g. buying cup of coffee, getting a haircut, purchasing a washer and dryer).

Complex transactions are transactions that require a series of events before completion (i.e. buying with credit, travel through travel agency, buying a home).

Ongoing transactions typically involve a contract. For example, you and your bank have ongoing business transactions or contracts with vendors.

Examples of Business Transactions

Consider the tire and lube shop we mentioned before. This type of business offers the opportunity for simple, complex, and ongoing transactions. Let's take a look at a few examples.

The first customer of the day pulls in and asks for an oil change. This customer has never been here before. They may do only this oil change with your company, or they may come back if you give excellent service. This is a simple transaction.

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