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Basics••By Bilto Team

Invoice vs Receipt: What's the Difference?


Invoice vs Receipt: What's the Difference?


While invoices and receipts are both important business documents, they serve different purposes and are used at different stages of a transaction.


Key Differences


Invoice


  • **Purpose**: Requests payment from the buyer
  • **When Issued**: Before payment is made
  • **Content**: Details of goods/services, amounts, payment terms
  • **Legal Status**: Creates an obligation to pay

    • Receipt


  • **Purpose**: Confirms payment was received
  • **When Issued**: After payment is made
  • **Content**: Payment confirmation, amount paid, payment method
  • **Legal Status**: Proof of payment

    • When to Use Each


    Use an Invoice When:


  • You've delivered goods or services but haven't been paid yet
  • You need to request payment from a client
  • You want to establish payment terms
  • You need to track accounts receivable

    • Use a Receipt When:


  • Payment has been received
  • You need to provide proof of payment
  • The customer needs documentation for their records
  • You're completing a transaction

    • Why Both Matter


    Both documents are essential for:


  • **Accounting**: Proper financial record-keeping
  • **Tax Compliance**: Required for tax reporting
  • **Dispute Resolution**: Can help resolve payment issues
  • **Business Analysis**: Track sales and payments

    • Best Practices


  • Always issue invoices before payment
  • Provide receipts after payment
  • Keep copies of both for your records
  • Use sequential numbering for easy tracking
  • Store both digitally for easy access

    • Conclusion


    Invoices and receipts serve complementary roles in business transactions. Understanding when and how to use each ensures proper documentation and helps maintain good business relationships.


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