The Difference Between an Invoice and a Receipt

While many people think invoices and receipts are essentially the same, there are many differences between them. A key difference between an invoice and receipt is the fact that they’re used in different situations.

Here Is a Definition of an Invoice Versus a Receipt:

  • Invoices: Invoices are given to customers before they pay. They authorize a transaction. They are often referred to by customers as the bill, and they can arrive in the mail, be delivered by hand or sent online.
  • Receipts: Receipts are given after the transaction is made, and they serve as proof of purchase. This is a key difference between an invoice and receipt.

Detailed Information On Invoices Versus Receipts:


There are several things that you typically see on invoices. You’ll always see the amount of money that is owed. If multiple items were purchased, all the purchases will typically appear on it. The primary purpose of it is to inform the purchaser how much money is owed.

When Do They Tend to Be Used?

Invoices are commonly given to customers who order items online. They also are commonly used in other circumstances when a business needs to take steps to ensure that payment is made.

How Long Do They Give You to Pay?

When you receive certain invoices, it is necessary to pay immediately. However, other invoices mandate that you pay at a later date. In many cases, this period can be around 30 days sometimes also referred to as net-30 invoices.

What Is Listed About the Seller and the Products Purchased?

In addition, an invoice always lists information about the seller. This often includes the seller’s name, address, phone number, and email address. In many cases, a URL of the company’s website is also included. However, there also can be only limited information about the seller.

Furthermore, an invoice often includes detailed information about the products purchased. Most of the time, it lists the price of the product, in addition to the type of product and its price per unit. Often times, the cost of the sales tax will also be listed.

How Are Invoices Laid Out?

There are different ways they can be laid out. Some invoices are laid out quite simply, and they simply state the amount of money that is owed and where to pay the bill. Others provide a lot more detail. If you are using them at your business, it is essential to determine what works best for your business. In addition, there are sometimes requirements that invoices must meet.

Are There Legal Requirements for What Must Be On an Invoice?

Businesses can be legally required to follow a certain format for creating an invoice. This is the case for businesses in the European Union. If they do not follow the legally mandated format, it is not considered to be an invoice. Here are some examples of things that are required to part of an invoice in the EU:

  • The date that the invoice is issued.
  • A VAT identification number of the customer.
  • The name of the business owner and the customer.
  • Information about the goods or services.
  • How the product will be transported to the customer.

There are numerous invoice software programs on the market that allow business owners to design and send invoices. These programs will ensure that they meet all legal requirements for your area.

What Else Can Be Included On Them?

Sometimes, invoices will provide information about how to get the product for a lower rate. For instance, a company may allow customers to get the product for a lower rate if they pay within 10 days. In other cases, there may be a late fee if the payment is made after the deadline.

It also is common for them to include shipping information. This can also help businesses determine where their buyers typically come from.

Some of them include the name of the clerk who gave the customer the bill. While this is commonplace in restaurants, bars, and other businesses where workers are tipped, it typically is the case where tips aren’t given.

In addition, rental invoices are a bit different than other invoices. Rental invoices always have a section on the slip that says how long the item is rented for.

What Kinds of Businesses Use Them?

There are certain types of businesses that typically use them. Generally speaking, invoices are given when payment is not expected immediately. However; there are exceptions to this rule. Here are some examples of businesses that are likely to use them:

  • Doctor’s Offices
  • Dentist’s Offices
  • Restaurants
  • Online Web Services
  • Magazines
  • Individuals Who Sell Items Online
  • Rentals

What Functions Can They Serve for Business Owners?

They are important for the businesses’ record keeping. When they are sent out or emailed, the sale is recorded. This is important for the management of the business’ finances. In some cases, the financial records created by invoices may be necessary for tax purposes.


Since receipts are given after the sale is made, they are designed with the customer in mind. Still, it is possible for businesses to log the receipts in a computer system. This can be a way for business owners to keep track of their finances in the same way that invoices can, but this generally isn’t the primary purpose of receipts.

What Types of Businesses Use Receipts?

Typically, receipts are used when payment is made before services are rendered. Here are some common examples of situations where receipts would be more appropriate than an invoice:

  • A purchase at a supermarket
  • A purchase of gasoline
  • Purchases from street vendors

What Information Is on a Receipt?

In addition to listing the item that was sold and its cost, receipts also typically mention the method of payment. It can be important for business owners to determine how their customers typically pay for products.

Caution is often taken to ensure that customers’ personal information doesn’t appear on them. This is because receipts often end up thrown on the ground either accidentally or intentionally. If too much personal information about the customer were contained on a business’ receipts, it could result in identity theft.

Many of them list the contact information of the business. Of course, this information is being provided for a different reason than it is on an invoice. Some receipts only provide the name of the business. However, others provide the phone and fax number of the business as well. There are even some of them also include the email address of the business or business owner. Often times, the name of the cashier is listed on a business’ receipts. Many of them don’t list any contact information about the business.

Do They Follow a Standardized Format?

One key difference between invoices and receipts is that receipts don’t follow a standardized format as required by law. This is because there typically aren’t laws that dictate what information is contained on receipts. However, many companies use the same format for receipts at all of their branches. Therefore, there are fewer options for software programs to design them.

Can They Be Hand-Written?

While this is uncommon nowadays, they can be written by hand. However, this is typically only the case with very small businesses that don’t typically make many sales. This is much less common with invoices due to the fact that they often use a standardized format.

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