Recording every transaction is important for every business whether it’s a small business or big. Without documenting every transaction, returns, or exchanges, it’s impossible to keep your finances in order, take care of taxes, and monitor your progress. Most companies use a combination of an invoice and receipt for their transactions.
Invoices and receipts have similar functions but they are way different from each other. Therefore to keep recording your sales in the right way you should know how these functions and how you can use them.
What is an Invoice
Invoice is a request or a bill for payment in a transaction. An important thing you should know about invoices is that it is a legally enforceable document. An invoice is not just about requesting a payment. Invoices also list out other details like names of the vendor and customer, the address, phone number, and email address the services or goods provided. And of course, the date of the transaction, the invoice number, and total payment to be made.
What is a Receipt
A receipt is an acknowledgment from the vendor to the customer that the payment is received. If there would be any misunderstanding this will serve the customer to prove that the payment is made.
Receipts also can be used as proof of ownership. It lists various information such as the vendor and customer names, price, taxes, mode of payment, receipt number, date of payment, and total amount.
The difference between Invoice and Receipts
The main difference of an invoice and receipt is the time at which they’re issued and their purpose.
Main Differences Between Invoice and Receipt
- The main difference between an invoice and a receipt is that a receipt is issued after payment is processed while an invoice is issued prior to a payment being made.
- An invoice is a request for payment by the seller, whereas a receipt is proof of payment given to the buyer.
- The invoice lists the total amount that has to be paid. While the receipt shows how much has been paid and what the mode of payment.
- An invoice is sent to the customer who has to make a payment, and a receipt may go to a customer or a third party as a proof of payment.
- Invoices are used to keep track of products or services sold. Receipts acknowledge that a payment has been made.
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