Invoice Vs Receipt: What Is an Invoice?

An invoice is a formal document requesting payment against the goods or services delivered to the customer. It’s like a business saying, “Hey, please make the payment” to the customer. An invoice can be in a physical or digital form, highlighting the outstanding amount, due date, invoice number, and payment terms.

Upon receiving an invoice, the recipient is required to pay the said money via cash, check, or online payment. Failing to pay an invoice on time will attract potential penalties. Similarly, on the other hand, businesses are also responsible for sharing an invoice in a timely manner. It acts as a formal payment request to clear the pending dues.

Receipt vs Invoice: What Is a Receipt?

A receipt is a physical or digital document acknowledging that payment has been made by the payer. In simpler words, it’s evidence of payment confirmation. A receipt is generated by the business as soon as they get paid. They share the original copy with the customer, while another copy is kept for their internal financial records.

A receipt confirms when and how the payment was completed, and for which invoice it was generated. So, in case of a client’s disputes, receipts come in handy, emphasizing why the business collected the money. Clients, on the other hand, can save receipts to meet their tax obligations.

Receipt Vs Invoice: What’s the Difference Between Invoice and Receipt

Here’s the invoice receipt difference explained in detail.

Difference between invoice and receipt: When to Use?

When to Use an Invoice?

An invoice can be used when your guests make a purchase and you want to request payment formally. It tells the buyer what they owe, what they are paying for, and how soon the payment needs to be completed. Plus, invoices can also be utilized in case of partial payments, where you need to bill your clients at different stages of the sales process.

For example, independent contractors can issue invoices upfront, during the ongoing work, and after the completion of a project. They will keep collecting the money by issuing an invoice at different stages.

When to Use a Receipt?

A receipt can be used right after receiving the payment from your consumers. When you get paid, you can generate a professional-looking receipt and hand it over to your customer, acknowledging that you have received a payment. Unlike an invoice, it can’t be used to demand a payment, but only to confirm the received payment.

For example, say you run a fitness studio in Philadelphia. Your client pays $150 in cash to buy a new membership. At that time, you can use a receipt to confirm that you collected the payment in cash on a particular day.

Why Do Some Clients Request Both an Invoice and a Receipt?

Some clients demand both an invoice as well as a receipt together because of the reasons below.

1. To Clear the Confusion

In case the clients have no idea when they have paid and for what reason, they may ask you to send both a sales invoice and a receipt. They can check the details in an invoice and compare it with the given receipt to clear their confusion.

2. Financial Transparency

Sometimes the clients have shared responsibilities, especially when associated with non-profit organizations or public agencies. So, they need an invoice and a receipt to justify the expense to their CEO or CFO. As a result, they ask you to share both documents simultaneously.

3. Tax and Audits

Since many foreign countries legally require proof for tax deductions and compliance checks, the client will ask you to provide an invoice and a receipt. An invoice is required to know how much you charged. Similarly, a receipt is needed to know how much sales tax was paid.

Create Invoices and Receipts With AI-Ready Invoicing Software

From creating professional invoices to making high-quality receipts, all you need is a reliable invoicing solution, Moon Invoice. It comes equipped with modern features like customizable invoice and receipt templates, credit notes, expense tracker, detailed reports, and an AI-assisted quick scan.

Unlike paper-based invoices or receipts, you neither rely on manual dependencies nor waste time fixing minor errors. Create a professional-looking invoice, attach a desired payment method, and get paid as early as possible. Later, you can convert the same invoice to a payment receipt in a single tap.

Let us show you how it works.

Creating and Sharing an Invoice

1. Log in to the Moon Invoice or sign up for free and start creating an invoice from the “Invoices” tab.
2. Hit the “+” icon and fill in the customer details, such as full name, billing address, contact number, or email. These details will be automatically saved for future purposes.
3. Enter a few more details like invoice number, currency, due date, and attach your preferred payment method.
4. Next, you can add product details, including their rates and quantities. For service-based businesses, you can add multiple tasks.
5. Include discounts or select taxes if applicable, and it will automatically adjust the total outstanding amount.
6. Scroll down a bit and mention additional notes, attach files if required, or highlight payment terms and conditions.
7. Then, click the ‘Save and Preview’ button to save your changes. Open a preview and check if everything is correctly mentioned.
8. Dispatch an invoice directly via Email or WhatsApp. If needed, you can also take a normal print or a thermal print.

Generating a Receipt

Creating a new receipt from scratch is quite a similar process to invoice generation. Here’s how Moon Invoice works as an online receipt maker.

1. Open the Moon Invoice app using your credentials or sign up for free on the web app. Find ‘Sales Receipts’ in the menu options on your left side.
2. Enter customer details, such as full name, delivery address, contact number, or email address. Details once entered will remain saved on the Moon Invoice.
3. Thereafter, enter details such as currency, payment date, and the payment method used by your client.
4. Next, include product details, delivery address, delivery time, and tasks completed, along with their brief descriptions.
5. Specify the product or service cost, the discount offered, or the taxes applied, and let Moon Invoice calculate the total paid amount automatically.
6. You can also add additional notes if needed or highlight your company’s refund policy.
7. Save changes and thoroughly check the details on the receipt. You can later send it digitally to clients via WhatsApp or Email.

Invoice Vs Receipt: Final Thoughts

Sales receipt vs invoice, in a nutshell, are two formal documents with different purposes. When created digitally and professionally, they can help you boost payment collection without straining your relationship with clients.

Be it a digital invoice or receipt, they don’t require office space like paper documents. Instead, they are stored in the cloud-based invoicing software, where they never get misplaced.

Referring to the aforementioned details, our main takeaway is that an invoice is a payment request document, while a receipt is proof of completed payment. On that note, we recommend trying Moon Invoice’s free invoice generator or free online receipt maker.

Invoice Vs Receipt FAQs