Invoice vs Receipt: Key Differences You Need to Know

By Annapoorna


Updated on: Apr 21st, 2022


3 min read

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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.

What is an Invoice?

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:

  • Business details and contact information
  • Client contact information
  • An invoice number
  • Billing date
  • Due date
  • List of products and/or services and their prices
  • Taxes, discounts, or additional fees
  • Total amount due
  • Payment terms

Purpose of an Invoice

Although different types of invoices are generated by businesses for different purposes, mentioned below are some of the major purposes of issuing invoices:

  • To request payment against the products and/or services provided
  • To successfully operate a business by ensuring smooth cash flow
  • To speed up the payment process and accurately record buyer-seller transactions
  • To notify the customers about the due amount and payment deadline
  • To track current sales and estimate future demand.

What is a Receipt?

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:

  • Business details and contact information
  • Client contact details
  • List of products and/or services along with their prices
  • Total amount paid
  • Date of sale and payment

Purpose of a Receipt

  • To notify the customers that their payments are received
  • To track sales and additional expenses
  • To recover any lost invoice income or present in a tax audit
  • To file financial reports and plan future expenses
  • To aid customers in reclaiming VAT on specific purchases and ensure smooth purchase return or exchange processing

Invoice vs Receipt

Point of DifferenceInvoiceReceipt
PurposeIt is used for requesting paymentIt is used as a proof of payment
Time of IssueIt is issued after the sale of products and/or services but before receiving the paymentIt is used after the payment is received by the seller
NeedIt helps in tracking sales and predicting future revenueIt aids in the return or exchange of purchased items
ContentIt contains the total amount to be paid and a unique invoice numberIt includes the total amount paid and a receipt number
About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more


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