Is an Invoice a Receipt? | Key Definitions and Examples for Businesses
An invoice is not a receipt and the key difference between the two is that an invoice is issued before payment as a way of requesting compensation for goods or services, while receipts are issued after payment as proof of the transaction. An invoice tracks the sale of a business’s goods or services. A receipt serves as documentation for the buyer that the amount owed for the goods or services has been paid.
Get to know the key differences between invoices and receipts with these related topics:
What’s the Difference Between an Invoice and a Receipt?
The key differences between an invoice and a receipt are the time at which they’re each issued and the purpose they serve. Here are the main differences between an invoice and a receipt:
- The main difference between an invoice and a receipt is that an invoice is issued prior to a payment being made and a receipt is issued after a payment is processed.
- An invoice is a request for payment issued by the seller, whereas a receipt is a proof of payment given to the buyer.
- An invoice is used by businesses to track the sale of their goods and services, whereas a receipt serves as documentation used by the buyer to demonstrate the amount they’ve paid for the goods or services.
- An invoice alerts a client to the total amount due and the deadline to submit payment, whereas a receipt outlines the total amount paid along with the method of payment.
This sample invoice from Canva demonstrates how an invoice differs from a receipt. This invoice example shows the amount owing on the bill for the specific services rendered and it offers a unique invoice number, the total amount owing and the due date for payment. The service provider will send this invoice to their client as request for payment.
If you’re looking to make your own invoices to issue to clients, this article outlines the steps involved in creating an invoice.
This sample receipt from Stripe shows some key differences between a receipt and an invoice. The receipt shows the amount paid, the date the payment was made and the method of payment the buyer used, in this case, a Mastercard credit card payment. In this example, Stripe would create the receipt at the time the payment was accepted and offer the receipt to the buyer as proof of the completed transaction.
What Is a Payment Receipt?
A payment receipt, also referred to as a receipt for payment, is an accounting document that a business provides its customer as proof of full or partial payment toward a product or service. Payment receipts typically include the following information about the transaction:
- Business name
- Clear identification as a payment receipt
- Reference to the original invoice number
- Date of payment
- Method of payment used
- Amount received
- Amount still owing, if applicable
Why Are Receipts Important in a Business?
Receipts are important for all businesses because they help with complete and accurate recordkeeping. Receipts allow businesses to track all their expenses and they serve as important documentation in the event of a tax audit. A complete record of business expenses in the form of receipts can also help businesses with their future planning, as a business can review historical data through its receipts and use that information to create business budgets based on past expenses.
Accurate recordkeeping allows businesses to track the financial performance of the company, easily create financial statements, record deductible business expenses and prepare tax returns.
Can I Claim Expenses Without a Receipt?
In general, a business cannot make a tax claim without a receipt as proof of the purchase. All business expenses you’ve claimed as deductions on your tax return should be supported with documentation, including receipts. A bank or credit card statement is not enough proof of a business expense: the full sales receipt is required.