What’s the Difference Between an Invoice and a Receipt?

When running a business, a receipt of payment and an invoice are the most common documents accompanying financial operations between parties. The primary function of an invoice is to notify the customer of the necessity to make a payment. At the same time, a receipt is also involved in the charging process. Is there any difference between these two documents? When are they issued? What does a receipt look like, and can it be substituted for an invoice? Read our guide to learn all about this.


What Is a Receipt?

A receipt is a document an individual receives after paying for a product or service. The receipt confirms that the buyer does not owe any money to the seller. In other words, it is a strict accounting document that shows that the seller has received payment from the buyer. 

An invoice has much in common with a receipt, but is an invoice a receipt? The answer is no. Unlike a receipt, a consumer receives an invoice templates before making a payment. Similar to a receipt, it includes a list of services or products and information about taxes and shipping. The main receipt and invoice difference is that the first confirms payment, while the second simply asks the consumer to pay. 

Invoice vs Receipt

Earlier, we mentioned that the receipt is written after the purchase. Thus, it indicates the fulfillment of obligations for each of the parties. Conversely, the invoice is sent before the receipt of funds. These documents are issued at different stages of the customer and supplier relationship. They also have various features and functions. The invoice is meant to remind the individual that he owes a certain amount. It helps not to forget the deadline and is a draft for a future receipt. For businesses, invoices help count current sales. That’s why, many businesses use Invoice Template Microsoft Word and customize them according to business information.

A receipt is more often used to calculate profits. In addition, it serves as proof of the ownership transfer between the parties. And for the customer, it is an official confirmation that no debt is owed to the business.

For business convenience, invoices are labeled as unpaid, overdue, and paid. Many people will ask, can an invoice be used as a receipt? Or can a receipt be replaced with an invoice with a “paid” status? Unfortunately, no. Although these documents duplicate each other, they have different legal ranks. Unlike a receipt, an invoice cannot be used as official proof of payment. Monitoring the status of an invoice is appropriate for internal calculations. However, it does not exempt you from having to issue a receipt. Review the sample invoice template to see the difference between these documents.

The Purpose of Receipts in Business

Receipts are needed in a variety of business processes. Among the most common occasions where a receipt is required, we’ve highlighted:

  • Customer relations
  • Internal accounting
  • Returns and exchanges
  • Warranty service
  • Proof of shipment
  • Proof of tax payment

Practice shows that businesses can’t do without receipts. But how to file invoices and receipts? The Invoice Maker by Saldo Apps comes in handy to save time when filing business documents. It has a built-in receipt maker that will help generate a receipt in seconds. Simply fill in the requested information, save a copy, and send it to the recipient. The flexible software helps make not only a professional but also a personalized receipt. One multitasking tool will help organize all business documentation, whether it’s an estimate, an invoice, or a receipt.