Difference Between an Invoice and a Receipt: Two Sides of the Same Coin
If you run a business, then you’ve most definitely come into contact with and had to make either invoices or receipts. However, a lot of business owners don’t actually know the difference between these two critically important documents. Well, that ends here… Keep reading to find out more!
What’s an Invoice
An invoice is essentially a bill or a list of goods or services consumed or bought. Businesses issue invoices when it’s time for customers to pay, similar to a request.
There are many different types of invoices, but most of them include the following information:
- Names of the buyer and vendor/company
- The total price/expense of products or services/breakdown of individual prices
- Unique record-locator
- Possible payment methods
- Shipping and handling, if applicable
Additionally, invoices also serve as tax records, legal proof in case of transaction disputes, critical marketing information, and more.
Invoices tend to be most common among organizations that sell big quantities and companies or professions that provide services instead of products, like lawyers or accountants for example. Even though they might be more common among those types of industries, any company of any size can issue an invoice to request payment.
Invoices also come in different forms, for a long time they came in paper form and were either sent by mail or fax. However, now with the digital era, you can easily send any type of invoice with a couple of clicks.
What’s a Receipt
A receipt is a document issued after payment has been made, its main purpose is to act as proof of purchase for both the client and the seller. Besides the amount charged and paid, receipts should also include the following information:
- Date of Payment
- Business details, such as an address, name, etc.
- Corresponding invoice number
Receipts typically tend to be physical documents, although if you’re shopping online you’ll be issued an electronic one. Some in-person businesses have also started opting for electronic receipts even for in-store purchases.
Customers tend to keep receipts, even long after purchase, for various reasons. On one hand, it allows customers to keep track of how much they paid for their records. Another essential reason is that in case something goes wrong with the product, a receipt is almost always required if they want to return it. For businesses, it acts as a claim, especially if a customer wants to return a product because it acts as a proof of purchase.
Difference Between Invoices and Receipts
As explained above, invoices are documents that are issued before payment, and receipts are given after payment.
The two should also have different information on them, invoices are more detailed, and should therefore include a breakdown of products or services purchased. However, receipts are simpler and don’t require as much detail, only the amount paid for, and any balance remaining.
Creating, recording, and keeping track of invoices and receipts can be a lot of work. Luckily enough, there are a vast amount of affordable and powerful SaaS programs to make the process easier for businesses. You can use them to issue, track, and follow up with all of your invoices and receipts all in one place.
Click here to take a look at some of the best programs out there!
Invoicing and Issuing Receipts: Two Sides of the Same Coin
Although they are different documents, for different stages, they both fall under the same umbrella of the billing process. Having both, along with a solid recordkeeping system, is critical for any business looking to really turbocharge their billing and sales processes.