There’s a lot of business jargon when you’re a small business owner. When it comes to billing customers, knowing what the terms “receipts” and “invoices” mean, how they differ and when to send these documents to clients may seem confusing.
This blog post explores the differences and similarities between receipts and invoices, and how Bookipi can help you manage them both.
What is an invoice?
An invoice is a document sent by a seller to a buyer formally requesting payment for goods or services. Invoices outline the details of a transaction with your customer, including quantities and prices of goods or services provided.
The term ‘invoice’ is also known as a ‘commercial invoice’ where the invoice is issued after goods or services have been provided. This is different to pro forma invoices which are issued before goods or services are provided to the customer.
Commercial and pro forma invoices are the most common invoice types. However, there are several types of invoices like recurring invoices for ongoing services or subscriptions. You can make invoices including recurring invoices quickly and easily with an invoice generator like Bookipi.
What is a receipt?
Receipts are documents that you provide to customers as proof of payment of an invoice. Receipts help confirm a transaction has taken place and are helpful for customers or buyers to reconcile expenses.
A paper or digital receipt is issued when you make a purchase. As a small business owner, providing digital receipts to customers can save time, keep you organized and is often preferred as a contactless way of confirming invoice payment.
Receipts typically include the following information:
- Date and time of the transaction
- Description of the goods or services purchased
- Quantity of goods or services purchased
- Total transaction amount
- Accepted payment method (cash, credit card, check)
- Seller or vendor information (business name, address, contact details)
Receipts play a key role in small business accounting and record-keeping. As receipts provide a detailed record of transactions, they’re important to have and issue to customers for tax purposes, financial reporting, and account reconciliation.
Using Bookipi, small business owners can make and send instant receipts from invoices once invoices are paid by clients on web app and mobile app.
What are the differences between receipts and invoices?
Receipts and invoices are both important documents for small businesses. Sometimes the terms are used interchangeably but there are key differences between invoices vs receipts.
- Purpose –The purpose of an invoice is to request payment for goods or services provided. In contract, a receipt is proof of purchase and acknowledgement of client payment received by the seller.
- Timing – Invoices are typically issued before payment is made, while receipts are issued after payment is made.
- Content – Invoices typically include more detailed information than receipts. On top of transaction details, invoices may also include payment terms, payment due dates, terms and conditions and special disclaimers. Receipts, generally include basic information such as transaction date and time, itemized summary of goods and services, amount paid, and payment method.
Can I use invoices as receipts?
Yes, invoices can serve as receipts, but they are not the same thing.
Invoices are documents that request payment for goods or services. Invoices are typically issued after the goods or services have been provided. Invoice payment is due within a time period specified by a business vendor. Invoices are typically more detailed in nature with more descriptions of products and services offered in an itemized summary.
Receipts, on the other hand, are mainly used as proof of payment. Receipts confirm that a transaction has taken place and the seller or vendor has been paid. Usually, receipts include information such as transaction date and time, short descriptions of the goods or services, prices and total amount paid by a client. You can generate instant receipts with Bookipi when you mark your invoice as paid or it gets paid by your client via our secure card payments.
Invoices can serve as as a record of a transaction especially if you use an invoice app like Bookipi. With our integrated card payments, invoices can even be used as some proof of payment. Our secure card processing ensures you can track the status of invoices as ‘paid’ and reconcile payments received by an unique invoice number, client and payment date.
However, it’s good practice for small business owners to both issue and keep, invoices and receipts, for sales and expenses, respectively.
Should I issue receipts with invoices?
Yes, it’s good practice to issue receipts to customers after invoices are paid. Receipts represent proof of payment and confirm that the transaction has been completed.
It’s helpful when you issue an invoice, to add a note indicating that you’ll provide a receipt. Issuing receipts with invoices can make your business appear more professional to clients by formally acknowledging payment. Sending receipts with our easy receipt maker can also help to prevent disputes or confusion over payments. Your business as the vendor or seller, and your client have a clear record of the transaction and payment.
Do I need to issue receipts and invoices for my small business?
Yes, it’s helpful to issue both receipts and invoices for the following reasons:
- Legal requirements – There may be legal requirements for small businesses to issue receipts and invoices in your country or state. Failing to comply with these requirements may result in penalties or fines.
- Record keeping – Issuing receipts and invoices helps you keep track of your business’s financial transactions. By having a clear record of all sales, you can monitor your revenue and expenses, as well as prepare financial reports and tax filings.
- Customer trust – Providing receipts and invoices helps build trust with your customers by demonstrating transparency and professionalism. It shows that you take your business seriously and are committed to providing accurate information.
- Dispute resolution- If there are any disputes over payment or the details of a transaction, having a clear record of the sale through an invoice and receipt can help to resolve the issue.
Make invoices, send instant receipts and generate other sales documents like quotes and estimates in one place with Bookipi’s small business software.
