How Does Triple Entry Accounting System Secure Your Business? (Explained With Illustrations)

Triple entry accounting system is a new form of bookkeeping that emerged as an alternative to double-entry system. The triple entry system works by the logging of three entries during a transaction. The credit entry, debit entry, and an additional entry of receipt. The third entry assures credibility to the transaction thereby securing the financial operations. 

The advent of digital record keeping has necessitated proof of work due to its easy data tampering vulnerability. While double entry system allows the parties to record entries separately in the ledger, the triple entry system introduces a common ledger between the parties. This creates transparency in the transactions, vouch for reliability, and enhances trust between the participants. 

Let’s see how triple entry system secure your business by introducing a receipt. Before that look at the working of double entry system and it’s faulty nature. 

Working of Double Entry System 

Let us consider a payment transaction between Alice and Bob 

Bob gives a payment of $100 to Alice. Both of them record the entries in their separate ledgers as below. Bob records in his books the debited amount of $100 in Alice’s account. At the same time, Alice records the credited amount of $100 in Bob’s account to her books.

While returning the money, Alice debit Bob’s account as $100, and the closing balance becomes $0. Simultaneously, after receiving the money, Bob records the credit amount of $100 in Alice’s account. This makes the closing balance of Bob’s book $0 and the account is closed. 

This is an ideal scenario during a transaction in a double entry system. Though, the double entry system is more prone to errors, loopholes and fraudulent activities. Let’s look at the same scenario but with a common flaw that happens with double entry system. 

Error in Double Entry System 

Here, while giving the money, Bob records $100 correctly in his books while Alice misses a zero and enter it as $10. Now, during the repayment, Alice gives $10 and closes Bob’s Account. However, as Bob received only $10 instead of $100, Alice’s Account in Bob’s book will still show a remaining balance of $90.  

This is one of the common errors that happen in a double entry system. Here, a minor error or deliberate tampering of the record could result in a mishap in the ledgers. Records also can be fairly easily falsified under a double-entry system.

Discrepancies may be found eventually through painstaking auditing, but the process is difficult, time-consuming, and far from foolproof. This also leads to distrust between the parties and results in hostile relations. 

The reason of these errors is that the ledgers are recorded independently by the parties. Here arises the necessity of a common ledger through which any error or discrepancy can be found out and resolved easily. This is when we introduce a receipt between the parties. This element of receipt or proof of work converts the double entry system to the triple entry system.  

Working of Triple Entry System 

Learn How Triple Entry System Solves The Error In Double Entry System 

As given in the figure below, in a triple entry system, when Bob pays the money to Alice, the data is recorded in the separate ledgers as well as the public ledger. Bob records $100 in his books, simultaneously the data gets recorded in the public ledger.

Alice who can also access this common ledger cannot alter any data in the record as it is immutable. While she records her repayment of $100 in the receipt, Bob sees it, approves it and sign it.

The receipt or the distributed ledger introduced between the parties act as the proof of work. It is accessible by both of them and authenticates the transaction. As a result, the parties can find any errors that is associated with the occurrence and resolve it seamlessly. This in turn makes the business secure, transparent and keeps the trust between parties intact. 

With the application of Blockchain technology, the issuing of receipt also makes the ledger immutable. Once the data is entered in the blockchain, it cannot be tampered, manipulated or altered. Unlike double entry system, it reduces administrative costs, and saves a lot of time. 

We just saw how this third entry automatically validates the transaction and make it secure, immutable, and transparent. 

It is quite surprising that still many people still stick on to the age-old double entry system which can easily cause errors and frauds in the financial matters. It’s high time that businesses adopt a reliable triple entry system to secure their businesses.

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Triple entry system: The next big thing in accounting

Triple entry accounting system is a new form of bookkeeping that emerged as an alternative to double entry system.


he origin of accounting traces back to the ancient Mesopotamian civilization. It was mostly used to record the growth of crops and herds. Since then, accounting has evolved into several nuances of auditing and bookkeeping. Industrial revolution to the digital revolution, accounting has witnessed different forms and systems. Lately stepping into the triple entry system, a whole new transformation of accounting is in the making. 

Before diving into triple-entry accounting, let’s understand what single-entry accounting and double-entry accounting is. 

Skip to Triple entry accounting if you are not a fan of backstories.

Single entry system 

single-entry system is a method of accounting where each financial transaction is entered only once. It is called single entry system as the transaction  is done as a single entry in journal. Here, it mostly records the cash inflow and outflow of a company in the record book. It is like having your own personal checkbook. Single entry system works only if the business is small or simple. 

Double entry system 

In Double entry, the transactions are recorded as an effect of two financial events – amount entered as debit and amount entered as credit, otherwise called as liabilities and assetsMost of the businesses follow double entry system for its accuracy and error-free conduct. 

Having an existing practice of accounting systems like single entry and double entry, what was the need for a triple entry system? how does it become the gamechanger in accounting? 

Triple entry accounting is as fascinating as it sounds due to its connection with blockchain technology. Now, let’s dig deeper into triple entry system and the role of blockchain in it. 

What is triple entry accounting system?

Triple entry accounting system is a new form of bookkeeping that emerged as an alternative to double entry system. The triple entry system works by the documentation of three entries. The credit entry, debit entry, and an additional entry of receipt.  

The credit and debit entries occur as in the double entry system. The feature that makes triple entry stand out from the traditional accounting system is the third entry, a receipt. This receipt is an audit that is cryptographically verified by the network that ensures security. 

These entries include purchase of supplies and products, sales, expenses, and taxes. In fact, every penny spent and taken goes into the entry. This receipt is advocated by blockchain technology, the decentralized way of operations. 

Blockchain is a digital record or public ledger of transactions which is distributed among the network to ensure security and ease of access worldwide. 

Easily explained: 

To explain this more illustratively, consider a situation where a person sells an item. The seller records a debit in his account for the money gain while the buyer records credit for the amount spent. Two different occurrences are performed and filed in separate accounting records in the same transactionThis is where the double-entry stops at.  

Here is when blockchain technology comes into role. The triple entry system takes it from there by introducing a public ledgerThese separate accounting records are now filed in a single distributed, public ledger. It creates an interconnection between themaking a transfer between two wallet addresses. All entries are cryptographically secured and distributed in the network. Thus, it is credibleencrypted, and not falsifiable.  

How does Blockchain become a part of triple entry system?

Rather than including blockchain as an element in this system, it’s better to say that, the advent of blockchain triggered to develop an alternative accounting system.  The necessity for a trusted and neutral third party to audit the business system was inevitable. The emergence of bitcoin backed by blockchain technology thus came as a solution for this shortcoming. This third public ledger is decentralized, secure, automated, and immutable using blockchain protocol    

Hence, triple entry system can be accounted as a double entry system with cryptographically locked method enabled by blockchain. This opens to a more secure, reliable, and tamperproof way of accounting.  

Click here to learn more about Blockchain technology and it’s advantages in accounting.

Benefits of Triple entry accounting system
  • Automatically validates transactions 
  • Secure and private accounting system 
  • Decentralized network – not controlled by a single authority 
  • Double-entry system with cryptography 
  • Blockchain – distributed public ledger 
  • Smart contract – immutable contract between parties 
  • Tamper proof record of data 

All these undeniable features make triple entry system stand out from the traditional bookkeeping solutions. Switch your business accounts to this novel accounting system for a safe, secure, and reliable way of managing books. Enable it with the upcoming triple entry feature with SimpleAccounts and take future in your hands.

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