Are you currently unsure of the difference between an invoice and a receipt?
While both are records of financial transactions, they have clear differences. In this article, we break down these differences for you!
We’ll cover:
Let’s get straight into it!
An invoice is a financial record that is given to a customer by a service provider or seller.
It gives the customer clear information about the product or service that was sold, the cost of the product or service, and the required date of payment. Invoices are essential to businesses for tracking revenue and ensuring tax records are correct.
Generating invoices are an essential part of record keeping, as they ensure both seller and customer have a record of the transaction. They are also used to help sellers or business owners to keep track of revenue and who owes them money.
When it comes to tax time, invoices are used to document revenue. In the case of any disputes, invoices can also act as legal evidence; they can also be used as evidence of income if you choose to sell your business.
Last but not least, your invoice can help to reinforce your company or personal branding by including your logo and brand.
At Bonsai, we demystify the invoicing process completely. We have a gallery of invoice templates to use, designed to suit all businesses – simply search by industry to find the ideal one!
We have a ton of options, but the most common invoice types include:
This is the most common invoice type: it’s used to send to clients after they’ve received products or services. It outlines what they received, the amount owed, and the payment date.
This is an invoice tailored for freelancers or people that are self-employed. As well as offering standard invoice information, it also specifies the details of the job provided by the freelancer, ensuring clarity.
This is a great choice for clients who make regular payments for reserved services – think paying for coaches or consultants. This type of invoice sets out a clear commitment between the provider and client for a set period of time.
This type of invoice is a preliminary bill provided before goods or services are actually provided. It isn’t a formal payment request but is used as a stand-in until payment details are finalized.
A receipt is provided by a seller to a customer as proof of purchase, confirming that the payment has gone through.
It usually lists what was purchased, the total prices and amount paid, as well as the date of the payment.
A receipt confirms that you’ve received the client’s payment. It lets you keep track of your cash flow and expenses, as well as serving as a tax record.
In the case of a dispute or refund request, a receipt shows that the client actually did pay the amount requested.
Common types of receipts include sales receipts, which outline that goods were purchased, and service receipts which detail which services were provided.
Invoices and receipts have some similarities, but there are clear differences between the two document types:
Invoices are sent out by the seller as a request for payment; they lay out what was provided and how much the customer needs to pay.
Receipts are provided by the seller after the client makes a payment, confirming that the payment was received.
Invoices are more detailed documents, featuring a detailed list of products or services provided, quantities, terms of payment, and more.
A receipt tends to be a brief summary of what was paid and when, as well as the payment type.
Both invoices and receipts are sent from the seller to the buyer or client.
Invoices are sent before the payment is made. Sometimes this will be after the goods or services are provided, and sometimes prior. Receipts are always sent after the goods or services have been paid for.
Invoices show a contractual agreement for payment between a seller and a client.
Receipts are mainly used as proof of payment but also have legal uses when it comes to disputes or refund requests.
It’s beneficial for most businesses to use both invoices and receipts. Using both not only gives your client a clear expectation of what needs to be paid and when – it also gives them peace of mind and confidence that their payment has been received.
Crafting professional, clear invoices and receipts is easy if you use Bonsai!
You won’t have to worry about sending reminders; Bonsai automatically reminds clients about overdue payments. They even include automatic late fees!
Bonsai also offers a huge variety of secure payment options, ranging from credit card to PayPal transactions.
For many freelancers, tax is a big headache – but with Bonsai, you don’t need to worry! Everything is calculated automatically, making sure your billing is always accurate.
Bonsai’s invoices are fully customizable, with options to make branded, personalized invoices that look both attractive and professional.
Whether you work as a consultant, a welder, a tutor, or something else entirely, there’s a professional invoice perfect for you!
Sending invoices and receipts doesn’t have to be difficult. With the right tools, it’s an absolute breeze!
Bonsai is the perfect solution, letting you make automated invoice reminders, collect payments, calculate sales tax, and create custom invoices easily.
Bonsai combines an incredibly user-friendly interface with professionally crafted financial tools that makes managing the finances of your business easy.
If you need further convincing, why not try it out for yourself? When you sign up for the 7-day free trial, you’ll get full, unlimited access to all the features available in your preferred plan. Why wait? Sign up today!
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