Invoice vs. Receipt: The Basic Differences
Is an invoice a receipt? Despite the fact that every medium or small business owner has encountered these concepts, many of them still can’t answer this question clearly. Both receipts and invoices are issued during the sale. However, their functions are very different. In this article, we will explain what these documents are, how they’re different, and when they are used.
When To Issue an Invoice
An invoice is a document issued by an organization to a client after the customer has been provided with products or services. In essence, an invoice is a request for payment that includes detailed information about the transaction. Read more about invoices in our article.
Invoices are particularly common among companies with a high sales volume — typically, large producers or wholesalers. However, any enterprise, regardless of what it sells and to what extent, has to invoice customers after the sale. They record taxable income and are required by authorities in many countries. In addition, invoices are very important documents for internal accounting.
Mail and fax are the most common ways of invoicing. However, now that all financial transactions are online, it will be much faster and more efficient to send an online invoice to the client. For instance, Finom offers its customers the automatic creation and sending of invoices, as well as the subsequent control of cash proceeds on each invoice. Finom has a wide selection of plans from which you can choose the most suitable one.
But regardless of whether you use written or electronic invoices, they should be carefully monitored because they help you to quickly and correctly track the sale of your goods or services.
Standard Invoice Content
When creating an invoice, you should remember that as an official business document, it must contain the following information: the invoice number and date; the name of the organization and its contact information; a detailed description of all products or services purchased; their price and quantity; the total amount owed, including taxes and fees; the payment terms. All this information is necessary to ensure that clients know exactly what they are paying for and the amount owed.
Finom tips: How to create an invoice with Finom?
How To Write a Receipt
A receipt (or sales receipt) is a document that an enterprise provides to its customer as evidence of full or partial payment for a good or service. Unlike an invoice, receipts are issued to the customers after they have paid for the goods or services and serve as proof of payment, both to the organizations and to the customers. In fact, if the invoice is a request for payment, the receipt is proof of payment. It is a document proving the delivery of goods or services to the customers.
Like the invoice, the receipt can be delivered to the client, both in hard copy and online. But no matter what form the receipt takes, it’s essential to provide the customer with one. It’s necessary if they have any problems with the product and they want to return or exchange it, and the business should be able to verify that the customers' demands are fair.
What a Receipt Includes
A receipt is a much less detailed document than an invoice, but it also contains important information about the transaction. It should include the following information: your business’ name, contact information, and logo; the sale date; a detailed list of sold goods and services; each product and service price; total payments, inclusive of all taxes and charges. You may also add the payment method, terms of sale, or your organization’s return policy.
To Sum Up
Hopefully, the difference between a receipt and an invoice is now clear. In order to complete the picture, we will highlight the most important points:
- The main differences between a receipt and an invoice are the time when it is issued and the purpose it serves. An invoice is a claim for payment before the payment is made. A receipt is proof of payment and is issued after processing;
- The invoice is used by the business to track the sale of its goods and services, while the receipt is used by the buyer to confirm the amount paid for the goods or services;
- The invoice reflects the total amount and timing of payment, and the receipt indicates the total amount paid and the method of payment.
Knowing that, you will never have questions like “is an invoice a receipt?” again.
In today’s world, time is the most precious resource. It is particularly important for business people who have to make daily choices — to devote time to their business or to themselves and their families. Trust the care of your invoicing to Finom, and save your time for the most important things.