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What is an invoice and a bill? Are they the same? Bills and invoices both give us information about the money owed as a result of a sale of a product. But they are radically distinct, and they’re used for different purposes in a business. An invoice is issued by a company to collect money from its customers and on the other hand, the bill shows the money that customers owe to the supplier.
In this article, we'll clarify: what are the definitions of an invoice and a bill? What are the differences between invoice and bill? Do they both have an accounting and fiscal role? What are other transaction receipts?
As a business, an invoice shows the amount of money you have to collect from customers. It shows the items sold, the prices, the date of the appointments, the delivery, and payment terms. The word “invoice” is used to justify a business transaction between your business and your customer.
To make it clear:
In order for the invoice to be valid, it must contain a certain number of mandatory elements:
As a customer, you will receive a bill from your supplier that shows the amount you have to pay for all the products and services purchased.
To make it clear:
The main elements of a bill that you have to put are
An invoice and a bill are basically the same things but they are used in different stages of a business transaction.
An invoice shows the money that your company has to collect from customers. But when it is sent to the customer, it will become a bill or a payment reminder for the customers about the amount that they have yet to pay to the suppliers.
After all payments are done, both customer and supplier will receive a receipt to confirm the transaction.
This table will help you summarize the difference between Invoices & Bills:
Invoice | Bill | |
When | Before the payment is received by supplier | Before the payment is sent by customer |
Obligation to pay | Yes | Yes |
Components |
|
|
There are lots of transaction receipts such as estimates, sales receipts, accounting statements, etc. Let's take a look to find out what they are!
An accounting estimate refers to an approximate assessment of the amount of an item in the absence of a precise measurement method.
Examples:
A sales receipt, or simply "receipt", is a document that serves as an acknowledgment of payment for a product or service. It is issued by the seller, who will generate an invoice intended for the buyer who receives the good or service.
A receipt is usually issued when a payment is made online: once the payment has been validated, the merchant's web page will show the receipt, while a proper invoice will be sent to the e-mail address registered at the time of purchase.
An accounting statement is a written document dealing with at least one aspect of the company's accounting situation. Businesses use it to review their cash flow situation, the situation of the fixed assets, the depreciation, or even the financing of the company which establishes it.
The notion of the financial statement is most often used in a more precise way to designate the essential documents established to judge the situation of a company (income statement, balance sheet, cash flow, and appendices).
No. An invoice is not a bill. An invoice shows the money that your company has to collect from customers. A bill shows customers the amount they have yet to pay to the supplier.
No. The invoice is not a receipt. The invoice is a payment request while a receipt is proof that the payment has been received.
The invoice is sent before the payment to inform the client.
A sales invoice or sales record is an accounting document that records all the business transactions. It is important because you can use it to know how much a client owes you and all the changes in the transaction process.
In conclusion, invoices and bills seem similar but are different in the way they are used in a business transaction. We hope that you now understand the difference between these two terms through our article!