Invoice vs receipt: what's the difference?

The one-line difference

An invoice is sent before payment. It tells the customer what they owe, by when and how to pay. A receipt is given after payment. It confirms that money arrived, how much, when and by what method.

So the invoice starts the payment and the receipt closes it. On a job that is paid later, you send the invoice first and the receipt once the money is in. On a job that is paid on the spot, there is nothing to ask for, so you usually skip the invoice and give a receipt straight away.

gov.uk puts it simply in its guide for businesses: an invoice is not the same as a receipt, which is an acknowledgement of payment.

Side by side

Both should have a unique number, your details, the client's name, the items and the total. If you charge tax, both show it.

What a receipt adds is the payment itself: the date the money arrived, the method (cash, card, check, bank transfer) and, for a check, the check number. For card payments the last four digits are enough. What an invoice adds is the request: the due date, your payment details and any terms, such as a late fee you agreed. If a client pays only part of the invoice, the receipt shows the amount actually received, not the invoice total, and a short note of the balance still due keeps both of you clear on what is left.

When to send which

• Paid on the spot (cash, card or a phone payment at the end of a job): give a receipt. An invoice is not needed unless a business client asks for one for their books.
• Paid later (bank transfer within 14 or 30 days): send an invoice now, and a receipt when the payment arrives if the client wants one.
• A deposit before the work: an invoice for the deposit, or a proforma invoice if the client needs a document to approve the payment, then a receipt for the deposit, then a final invoice for the balance showing the deposit already paid.
• A partial payment: a receipt for the amount actually received, with a note of what is still owed. Do not mark the invoice paid until it is all in.
• The client asks for a "paid invoice": they want proof of payment. Send a receipt that refers to the invoice number, or the original invoice clearly marked as paid with the date.

Business clients often want both: the invoice for their purchase records and the receipt or bank statement as proof of payment.

One job, two documents

The receipt beside this article follows a typical sequence. A landscaping company's work truck needed new brakes.

1. Invoice INV-0571, issued the day the truck was collected: parts $286.00, labor 2 hours at $120.00, a brake fluid flush $89.00, sales tax at 6% on the parts, total $632.16, due in 14 days.
2. Receipt RCT-0312, issued nine days later when the bank transfer arrived: the same lines and total, plus "Bank transfer", the date paid and a reference to INV-0571.

Notice that the receipt has its own number in its own series. It is a separate document, not a copy of the invoice. Also notice the tax: in this example the shop charges sales tax on the parts but not on the separately stated labor. Whether labor is taxed depends on the state, so check yours before you copy this.

With a free Duebolt account you can open a paid invoice and tap Make a receipt: the client, items and totals are copied into a new receipt dated today.

Invoices, receipts, bills and statements

A few neighbouring words cause the same confusion:

• Bill is the everyday word for an invoice, usually from the customer's side ("I paid the plumber's bill").
• Statement is a summary of several invoices and payments for one client over a period, showing what is still open. It does not replace the invoices.
• Quote or estimate comes before both: a price you offer before the work. See the estimate template and quote template.
• Sales receipt is the receipt a shop gives at the till: a receipt, usually without the customer's name.

If you are new to all of this, the guide to what an invoice is covers the basics, and the receipt generator makes a receipt in a minute.

Which one do you need for taxes and expenses?

For your own records, keep both: the invoice shows the sale, and the payment (receipt or bank record) shows when it was paid. If you report income when you are paid rather than when you invoice, the payment date is the one that matters.

For a client claiming an expense, an employer or tax office usually wants proof that the money was actually spent, so a receipt (or an invoice marked paid) is safer than an unpaid invoice. In countries with VAT or GST, a business client reclaiming tax generally needs a proper VAT or tax invoice with your registration number on it, and a simple receipt may not be enough. When a business client asks for an invoice even though they have already paid, that is usually why.