You may have heard the words “invoice” and “bill” used interchangeably, but this is not always right. In this guide, we’ll discuss the important differences between an invoice and a billing statement, so you’ll know which one to send and why. It’s common to wonder if an invoice is a receipt or an invoice is a bill, and today we’ll dig into the latter.
What Is an Invoice?
Simply put, an invoice is a business record used to itemize and describe products sold or services performed for clients. An invoice can be a digital document (an Excel sheet or a PDF file) or be physically delivered.
In addition to a description of the products and services provided by the business, an invoice will also include the amount due, the due date, and the most recent previous payment, if any.
Invoices can also identify payment methods and instructions and can be authenticated using a secure e-signature system. They are important documents, as they can be used as evidence in case of legal disputes to support the claims of either party.
You can check out our free landscaping invoice template to see an example of a professional invoice.
What Does an Invoice Include?
While invoices can differ from business to business, a standard invoice includes the following:
- The label “invoice”
- A unique invoice number
- Invoice issuing date
- Client details (contact, address, email)
- Service provider details (logo, name, contact, email)
- Delivery date of product or services
- An itemized list and description of products or services
- Total amount charged (including any tax information or discounts)
- Payment terms, methods, and options
- Terms of agreement related to late payments, replacement or exchange of items, and other relevant events.
What Is a Bill?
A bill is a document issued by a vendor or business that specifies the amount a customer owes for goods or services purchased.
In a business-to-consumer setting (such as a restaurant or a grocery store), the buyer/client is expected to pay immediately after receiving the bill. In business-to-business (B2B) transactions, bills show the amount customers owe for services sold on credit, which is expected to be paid by a certain date.
Like invoices, bills serve as legal evidence of a transaction.
What Does a Bill Include?
A typical bill includes the following key elements:
- Sale date
- Seller and buyer details
- Description of goods/services
- The total amount owed, including taxes and fees
- Payment method
- Warranty details
Is an Invoice a Bill?
A bill and invoice may seem the same, but the word “bill” has a more subtle connotation. Receiving a bill implies that a payment is due immediately. For instance, the bill you receive at the end of your meal at a restaurant cannot be called an invoice. There is no later payment date specified—you’re expected to pay the bill before leaving.
How Are Bills and Invoices Different?
Technically, a bill and an invoice refer to the same type of document, as they both convey the amount owed as part of a business transaction. However, the main difference between an invoice and a bill lies in how they are perceived, depending on whether you are a buyer or a seller.
An invoice is sent by the seller, and a bill is received by the customer. This difference can be explained in two ways.
When a seller sends an invoice requesting payment, the buyer receives that invoice as a bill. For instance, a freelance writer sends an invoice to their client for the content they’ve produced for them. The document the client receives functions as a bill, letting them know that payment is expected.
The Payment Terms
The timeline by which a client is expected to pay also differentiates invoices and bills. Generally, in a B2B setting, services and products are offered on credit, meaning the client can purchase them and pay later as per the agreed terms. In such cases, an invoice is sent detailing the payment terms (such as paying within fifteen days of receiving the invoice).
On the other hand, a bill is issued immediately following service/product delivery, and the client is expected to pay then and there.
So, is an invoice a bill? Not exactly, because subtle differences in perception differentiate the two types of documents. But at the end of the day, these documents contain more or less the same details. an invoice which offers payment options with a later due date.
For more helpful invoicing information and examples of invoicing, make sure to check out our post on how to invoice for lawn spraying.