What Is the Difference Between Invoice and Receipt?
Small and large businesses need to maintain correct and clear documentation. It’s especially true for sales and transactions, which should have a written confirmation. As a freelancer and self-employed, you do paperwork on your own. You need to navigate in business terms. In this article, you’ll learn the receipt template and invoice definitions and understand when to send each of them.
What Is a Receipt
Receipts are one of the most common documents in our daily life. Every day, you make purchases in stores or on the Internet and receive proof of payment. Unlike other forms, the receipt of sales is issued to a buyer after they’ve deposited money for goods or services. They can be written out on paper or electronically. These files are essential for entrepreneurs and their customers to solve accounting issues and control budgets. They can also help resolve conflict situations.
If you compare a sample of invoice and receipt, you’ll see that the second is less detailed. There are no special requirements for it regarding the availability of specific info. However, remember that the more data in it, the faster you can resolve controversial issues. So, what should be in a receipt? Typically, it includes:
- details of your company;
- list and cost of purchased products and services;
- the total sum, including discounts and taxes;
- the date of purchase.
If you wish, add a payment method and brief information regarding the return of goods here. As you can see, payment and receipt are related to each other.
What an Invoice Should Look Like
Now that you know how to write receipts for payment let’s move on to invoices. Unlike the previous item, they are issued as a request for compensation after an order has been done. After receiving it, a client should transfer the agreed amount to the contractor’s account within the specified time frame.
Is an invoice the same as a receipt? No, invoices are official docs, which are pretty strict in some countries. If you work with foreign orderers, clarify what you need to include in a document to comply with local laws. When creating securities using Invoice Maker by Saldo Apps, provide the following information:
- file creation date, ID, and payment terms;
- info about your business and logo;
- contact details of a customer;
- complete list of items and services, price per unit or hour, quantity, and discounts (percentage or fixed);
- available payment methods;
- taxes and fees;
- the total sum;
- notes, tips, manuals, and guides (optional).
What is the invoice number on a receipt? The invoice number (or ID) is indicated in a receipt so that both parties involved know what exactly the money was paid for. It’s important information for bookkeeping, accounting, and tax reporting.
Receipt vs. Invoice — When to Use
As you can see, an invoice and receipt are really different in terms of content and purpose. Despite this difference, both of these forms are required for your company to function properly.
As part of a contract with a client, you provide them with services or products in the agreed amount and for a specified cost. After completing an order (or a certain stage of it), you should use PDF, Excel, or Word templates for invoices. So you record the fact that items were rendered and officially demand compensation from a customer.
In turn, an orderer, after receiving an invoice, should transfer the total amount within the time specified in a paper. After getting money, provide them with a receipt as proof of payment. You can send it to them electronically or on paper. If you have lots of clients, manually doing it might be tricky. It’s better to simplify your task by using automated systems that send documents after receiving compensation.