Invoicing Tips: What is the difference between invoice and receipt?

Either invoice or receipt, these are documents you’ve heard about but you might not be aware of the subtle differences that make them exactly what they are. Both invoice and receipt are non-negotiable commercial instruments, which are used during the course of a transaction.

So, let’s take a look at what both are, how they are used in business and when to be used;

What is an invoice?

An invoice is an itemised list of products sold or services provided, along with the amount of money owed for each line item, and the total amount of money owed. An invoice is sent from the biller (business owner) to the client, in hopes of being paid within a certain period of time.

We can also say that an invoice is a document, made by the seller and issued to the buyer, so as to authorise a sale. It contains the details of the goods and contains the name and address of the parties to transaction, price, discount, date, and place of delivery.

What is a receipt?

A receipt is different from an invoice in that an invoice is requesting payment for products or services received, whereas a receipt is a proof that the services or products have already been paid for.

An invoice comes before the payment has been made, while a receipt comes after the payment has been made.

Receipt, is a simple official acknowledgment, that the goods or services have been received. It is prepared by the vendor and given to the consumer and is used to show the ownership of the item.

How are they used?

Invoices are used to request payment from buyers, keep track of sales, help control inventory and facilitate delivery of goods and services. Invoices are also used to track expected future revenues and to manage customer relationships by offering favorable payment options, such as extended time periods for payment or discounts for early payment or cash payment.

Receipts are used by buyers or customers to prove they paid for an item, especially in return situations in which goods are faulty or defective. So, if you would send an invoice after a service has been completed and money is owed, and then you would send a receipt after you receive the payment from the invoice.


Both invoices and receipt are a prominent part of the purchase cycle. The invoice helps the seller to keep the record of sale and to determine that amount of merchandise has been received or not. The buyer can also track and match the details of goods or services listed on the invoice are received. The receipt can help the customers to track payments for the stuff and sellers can also identify that amount on which invoices is received and which ones are still outstanding.

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