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What Is the Difference Between an Invoice and a Receipt?

Receipts and invoices each play a role in documenting sales for a business’ accounting records. The difference between them lies in when they are issued and what they accomplish. Put simply, an invoice is a bill that is issued by a business to the customer before payment is made. A receipt is proof of payment given from the business to the customer after payment has been completed.


Invoices are issued for a few reasons. First, they set clear expectations about the upcoming sale, listing out the services or goods provided and outlining the payment terms. Will the customer have 30 days to pay or 90? The invoice makes those terms crystal clear.

Within an accounting system, invoices are used to gauge outstanding payments, or accounts receivable. Knowing when those payments are due and your average DOS will help you manage cash flow because you’ll be able to forecast when cash will enter the business.

Invoices follow a standard format. Online invoicing solutions will fill in most of the information on your behalf, but if you’re creating an invoice from scratch, be sure to include:

  • Your Company Information: List your company’s name, address, phone number, and website.
  • Your Customer’s Information: List your customer’s name (business and primary contact names, if applicable), address, phone number, and email address.
  • Dates: Include both the date the invoice is issued and the payment due date.
  • Invoice Number: Give all of your invoices a number so that you can easily track them. If you’ve never sent an invoice, start with 001.
  • List of Goods or Services: Outline exactly what you will provide in exchange for payment. This section should also include the rates or prices for each line item. If you are charging an hourly rate, break the price down to include the rate, the number of hours, and the total cost.  
  • Additional Fees: If you need to charge taxes or a handling fee, make sure those fees are listed as a separate line item.
  • Message to Customer: It’s customary but optional to include a nice message to your customer, thanking them for their business.

When you start offering payment terms to your customers, you will also need to create a system for following up on outstanding invoices. Online solutions may send automatic reminders, but some customers may require a warmer touch and will require a few check-ins by phone or email.


Whether or not you have sent invoices in the past, you have almost certainly come across receipts. Grocery receipts are often lengthy with dozens of line items on them, while a service receipt from an oil change may be printed up on a standard piece of paper with a lot of white space. Receipts come in many shapes and sizes, but they all perform the same function. They provide the customer with proof of payment for the goods or services listed on the receipt.

On the vendor side, receipts are the documentation used to track sales and, at times, inventory. It is proof that a sale has been completed and can be issued immediately upon a cash sale or after an invoice payment has been made. The only requirement is that it be issued after money has exchanged hands.

Similar to an invoice, there are some standard components of a receipt that should be included.

  • Your Company Information: List your company’s name, address, and phone number at the top of the receipt.
  • Date: List the date the receipt was created. This should be as close to the day payment was made as possible.
  • List of Goods or Services: Outline each good or service that was provided to the customer, along with the cost for each line item.
  • Additional Fees: List taxes and handling fees as separate line items before listing the total payment amount.
  • Total Payment Amount: If an invoice was sent, the total payment amount should match the total invoiced amount, assuming there were no changes made.

Both receipts and invoices help mitigate the risk of verbal agreements. By outlining the details of your transactions clearly, you eliminate the chances of a he-said-she-said argument over payments. On top of that, you will have clear documentation to guide your accounting, create accurate financial reports, and make it through tax time unscathed.

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