Difference Between Invoice vs Receipt
If you are running a business, even if it is on the smallest scale possible, you need to understand some business basics that will help your work go smoothly and grow over time. According to business experts, you need certain skills and practices and to understand when to apply them.
In this post, we will be looking at the difference between invoice and receipt and how these two relate, what they mean, how they can be of benefits to business owners and customers, and how they are different from one another.
Definition of Invoice
An invoice is defined as a transaction authorization document showing goods and services expected to be paid for. This document is usually given to a customer in the form of a bill showing every consumable that the customer wishes to purchase and how much they are worth. The client may or may not pay up right away depending on their agreement with the business owner.
This transaction authorization document is often used when a person makes an online purchase and is expected to make a payment on delivery or before the goods or services are delivered. It can also be used in offline transactions, especially when an organization needs to remind a customer of a payment that needs to be made.
From this explanation, it is obvious that this document requires a client to foot his bills as stated on the document, either immediately, or in thirty days at most.
Aside from the goods and services ordered and their costs, this document also contains information about the seller to make it easier for the buyer to reach the organization through the seller. Also, in comparing receipt vs invoice, it shows that the cost of the sales tax is also included in the latter, unlike in the former.
Definition of Receipt
A receipt is defined as a document that shows the proof of payment for certain goods or services. It is designed with the customer in mind because it protects their interest and right to what they purchased. It also helps the business owner to keep track of transactions for as long as possible, especially if they log them in a computer system.
This piece of paper shows the items the client has purchased, how much they are worth, and the method of payment. It may contain the customer’s personal information, but that is no longer a common practice since a buyer’s personal information may be carelessly disclosed when the paper is not properly disposed of. This was once one of the leading causes of identity theft.
It also shows information about the business – the name of the business, what they deal in, the name of the cashier, and more. One difference between receipt and invoice is that the former does not make use of a standardized format, which is understandable. The latter, on the other hand, is expected to follow a certain standard to be considered valid.
Main Differences Between Invoice vs Receipt
|Basis of Comparison||Invoice||Receipt|
|Definition||A transaction authorization document showing goods or services expected to be paid for||A document that shows the proof of payment for certain goods or services|
|Application||Before payment is made||After payment is made|
|Legal standard||Follows a standardized format||Does not follow a standardized format|
|Information displayed||Shows personal contact of the buyer, the goods or services purchased, and information about the seller||Shows information about the seller and the goods or services purchased.|
|Time frame||Payment may take as long 30 days from when it was received||Can only be received immediately after payment has been made|
|Function||For business record keeping and tax purposes||To protect the buyer’s right to goods or services paid for|
Difference Between Invoice and Receipt: Conclusion
So far, we have shared with you the basic differences we observed after the invoice vs receipt comparison. After researching about these documents and their purposes, one can conclude that the former is designed to protect the interest of business owners.
It reminds a client of a debt, serves as a record for a particular transaction, and can be used for tax purposes, too. The latter, on the other hand, protects the interest of the buyer, serving as a proof of payment that can stand anywhere.