Invoice vs Receipt - Main differences and examples

An invoice is used to collect payment after delivering goods and services. A receipt serves as proof of payment after a customer pays for a good or service. As a business owner, you’ve probably used invoices and receipts before.

While these documents have some similarities, they’re used for different purposes. 

Jump to:

• Key differences between invoices and receipts
• Using invoices and receipts together
• Manage receipts and invoices with QuickBooks
• How to write an invoice
• How to write a receipt

• FAQ about invoices vs. receipts

Key differences between invoices and receipts

While invoices and receipts have some similarities, they’re used at different stages of the sales process and document different information. The main differences are: 

• When they’re issued: Invoices are issued before a business has received payment from a customer, and a receipt is issued after payment has been collected.
• Payment information they contain: Invoices contain information about a future payment, including how to pay for it and due dates. Receipts contain information about a completed payment, including the date and amount paid.
• How they’re used in accounting: Receipts record a completed sale, so you’ll record them as income. Invoices mean the customer still has to pay you, so you’ll record them as accounts receivable.

When they’re issued

You issue invoices before receiving payment from your customer. Invoices act as a formal request for payment and detail the goods or services you provided along with the payment terms. For example, if you own a graphic design business, you’d send an invoice to your client after completing their project.

Receipts are issued after you’ve collected payment. They serve as proof of the transaction and confirm that the payment has been received. For instance, once your client pays the invoice for the design project, you’d give them a receipt showing the amount they paid and the date of the transaction.

Payment information they contain

Invoices contain information about a future payment. You’ll include details such as the amount due, payment terms, due dates, and acceptable payment methods. For example, an invoice for your design project might show a total of $1,500, due within 30 days, with payment options like bank transfer, credit card, or PayPal.

Receipts focus on completed payments. When you issue a receipt, it includes the payment date, amount paid, payment method (like credit card or cash), and any taxes or discounts applied. For example, a receipt for the $1,500 payment might state that it was paid via credit card on a specific date. This gives both you and your client a clear record of the transaction.

How they’re used in accounting

Invoices help you track the money you’re still owed, so you record them as accounts receivable in your books. This shows the revenue you’re expecting but haven’t yet received. For instance, if you send an invoice for the $1,500 design project, you’ll log it as an outstanding payment in your accounting software until your client pays.

On the flip side, receipts track the money you’ve already collected. Once your client pays the $1,500 invoice, you’ll record the payment as income. In your accounting software, you decrease accounts receivable and increase your cash by the same amount.

Using invoices and receipts together

Invoices and receipts are better together because they help keep your business finances organized and easy to manage. While they each serve different purposes, they work hand in hand to give you and your customers a clear picture of every transaction.

When you use invoices and receipts together, you make things clear for your customers. They'll know exactly what they owe and get proof when the payment goes through. You’ll also make tracking payments easier by pairing invoices with receipts to see what’s been settled and what’s still outstanding. On top of that, these records are invaluable for taxes, audits, or resolving any disputes.

Manage receipts and invoices with QuickBooks

Knowing the differences and similarities of an invoice vs. receipt will help you use them accurately within your business. Keeping track of invoices is an important part of getting paid on time and keeping your books clean. Organizing these tasks in one place by using invoicing software can streamline your processes and give you more time to focus on your business.

QuickBooks can help you create invoices and sales receipts to simplify billing, get paid, and keep track of your business finances in one place.

How to write an invoice

Invoices include detailed information about the goods and services you provided. 

Here’s how to how to write an invoice: 

• Add your business name, contact information, and logo. 
• Write down the customer’s name and contact information. 
• Include the invoice number, the date you created it, and the date of service. 
• Describe the goods or services provided, including price and quantity. 
• Spell out the payment information, including payment due dates, total amount, and acceptable forms of payment.

You can also add a message to the customer at the bottom of the invoice.

Can I issue an invoice after payment?

Invoices should be issued before a customer has made a payment.

In some cases, businesses may need to issue specific types of invoices after a customer has paid; these are called credit invoices and debit invoices. Credit invoices are used when you need to issue a refund to a client, and debit invoices are used to collect payment when you need to increase the amount a client owes your business.

Typically, you should issue an invoice before a customer has made a payment. However, there may be times when you need to issue a certain type of invoice after payment, specifically credit invoices and debit invoices. Credit invoices are used when you need to issue a refund to a client, while debit invoices are used to collect payment when you need to increase the amount a client owes your business.

How to write a receipt

There are different types of receipts, from cash register receipts to email receipts. Here’s what they should include:

• Add your business name and contact information. 
• Include the transaction number or order number.
• List the goods or services provided, including price and quantity. 
• Note the payment date and the total amount paid, including taxes, fees, and discounts. 

Some receipts will also include the customer’s contact information and payment method, as well as the return policy. Fortunately, you might not need to worry about creating a receipt as many payment tools automatically generate receipts when a customer makes a payment.