Managing and updating accounting documents is imperative for every business as it provides a better understanding of the ongoing financial condition. Businesses selling goods and/or services necessitate the generation of a transaction record. The record can be either an invoice or a receipt based on the situation. Although receipts and invoices are documents for recording financial transactions, they have largely different meanings and purposes.
An invoice or a sales invoice is a record generated when a business provides goods and/or services before receiving payment. Invoices become bills upon reaching the customers. They are requests for payment sent over mail or delivered by hand. An invoice typically includes the following:
Although different types of invoices are generated by businesses for different purposes, mentioned below are some of the major purposes of issuing invoices:
A receipt is a document generated by a business that proves the completion of payment by the customer. It is issued after the seller has received payment against the provided goods and/or services. Receipts also ensure smooth returning or exchanging of purchased items. A receipt typically contains the following:
Point of Difference | Invoice | Receipt |
---|---|---|
Purpose | It is used for requesting payment | It is used as a proof of payment |
Time of Issue | It is issued after the sale of products and/or services but before receiving the payment | It is used after the payment is received by the seller |
Need | It helps in tracking sales and predicting future revenue | It aids in the return or exchange of purchased items |
Content | It contains the total amount to be paid and a unique invoice number | It includes the total amount paid and a receipt number |