What is the difference between invoice and receipt?
Invoice and receipts are popular documents used in every business transaction to entail a form of agreement. It also helps the business organization to keep complete financial records.
The lesson provides a comprehensive difference between invoice and receipt in a tabular form for easier understanding.
What Is an Invoice?
An invoice is a business document sent by the seller to the buyer requesting payment of the product or service. It list all the products or services offered and their respective cost.
The document is made by the seller and it is sent after the delivery of the goods to the customers. It, therefore, a legal document binding the seller and the buyer.
What is a Receipt?
A receipt is a business document that shows proof of payment to the products or services rendered. The document confirms that the buyer has made the payment of the products or services.
The receipts are prepared by the seller and they can either be electronic or written depending on the nature of the business operation.
Comparison Chart: Invoice Vs Receipt
|Meaning||It is a business document prepared by the seller requesting for payment||It is a business document showing the proof of payment for products or services|
|Time of Issue||Before payment||After payment|
|Core Function||Show products or services issued by not paid||Show proof of products or services paid|
|Binding||Legal binding||Not binding at all|
|Details||Quantity, unit price, invoice number, discount, taxes and total due.||Quantity, unit price, receipt number, discount, taxes, the total amount paid and mode of payment.|
Core Differences between Invoice and Receipt
- Invoice is a legal binding between the seller and the buyer while the receipt is not legally binding.
- Invoice is issued before payment whereas receipt is issued after the payment
- Invoice is issued to request payment for the products or services rendered while the receipt is issued to show the proof of payment.
- The invoice indicates the total amount due while receipt indicates the total amount with the mode of payment.
- The invoice shows the track of goods or services on sale whereas receipt show documentation of merchandise paid.
The core difference between invoice and receipt is that the invoice is a document used to request for payment while receipt shows the proof of payment to the merchandise. Invoice is issued before payment while the receipt is proof of payment.