Invoice vs. Receipt: What's the difference?

Elie Toubiana
September 12, 2022

Understanding the fundamental distinctions between invoices and receipts can assist you in maintaining accurate and sound financial records and company operations. Not registering the distinct goals of the two papers may make it much more difficult to efficiently arrange your business funds and comply with correct regulations and norms.

What is an invoice?

We can simply describe an invoice as a request provided by a seller when goods or services are exchanged for payment.

What is a receipt?

A receipt confirms that the agreed-upon payment has been paid and serves as evidence of purchase for the consumer.

The Similarity Between Invoice and Receipt

Invoices and receipts are key accounting papers for keeping track of business transactions. When a transaction involves the exchange of products or services for money, they are helpful to both buyers and sellers. The two agreements contain the sums owing and paid in return for goods and services. Invoices and receipts often include information about the seller and the consumer and the total amount owed.

Because they have so many similarities, it's easy to see why invoices and receipts are frequently used interchangeably. On the other hand, operating as though they are the same might get your company into problems when filing taxes or claiming costs, as we'll show throughout this piece.

Why is the distinction needed?

Invoices and receipts should also not be confused with purchase orders. A purchase orders a document provided by the buyer to the vendor or client that describes the required products or services and the quantities and agreed-upon prices.

Key Differences

Read below to learn more about the distinctions between an invoice and a purchase order and why certain businesses may use both papers in business transactions. So, let us take a better look at the fundamental distinctions between invoices and receipts:

Payment Request

Because an invoice is a payment request, it is always issued before payment. Receipts are supplied after payment because they recognize payment.

Legality Of The Document

While an invoice is a legally binding document that informs the customer of the total amount owed, a receipt is a legal document that verifies payment was completed and can serve as proof of ownership.

Commercial Document vs. Payment

An invoice is a commercial document that generally identifies the items and services for which payment is due; information such as product quantities or service hours should be expected. A receipt specifies the amount paid and the manner of payment. However, it may not provide as much data as an invoice.

Consumer Handling vs. Proof of Payment

Invoices are always forwarded directly to the consumer who must pay. However, receiptscan be sent to either the customer or a third-person party because they provide proof of payment.

Tracking Sales vs. Payment Proof

Businesses use invoices to monitor the sale of goods and services, whereas receipts are used to establish how much a customer paid for the goods or services.

Bonus Tip

Developing a regular and accurate invoicing system is critical for small business accounting. Budgeting for its growth and development becomes much easier when your company's accounting operations are streamlined. We recommend Invoice Builder as an exceptional tool to make invoices online easily.


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