If you’re wondering whether you can use our landscaping invoice templates as receipts, the answer is no–an invoice is always issued before payment, while a receipt is issued after it. Each document comprises different elements and holds different meanings in the business world.
In this post, we’ll explore the differences between these documents and unpack some common misconceptions.
Invoice Versus Receipt
An invoice is a document that lists the goods or services sold, along with respective rates for each item. It also lists the subtotal, taxes, and total due amount. If an invoice is a contract is an interesting topic, especially because there are around fifteen types of invoices used in the business world.
A receipt is a document confirming that requested payment has been received. It may or may not include a list of products or services, but it always mentions the total paid amount.
There are two types of receipts—cash receipts, which acknowledge receipt of cash, and sales receipts, which provide proof of purchase for goods or services.
Who Issues Invoices and Receipts?
Invoices and receipts are issued by sellers. However, an invoice is issued to request payment, and a receipt is issued after the buyer has made a payment.
For example, suppose you’re a graphic designer, and you get hired by a creative agency requiring three to five graphics every month on a freelance basis. You settle on the form of payment and the rate per graphic at the time of hiring.
Now, the company asks you to design three graphics in month A and four graphics in month B.
At the end of month A, you’ll create an invoice and bill the company for three graphics at the set rates. Once they’ve paid what you’re owed, you will send them a receipt of confirmation—a document confirming you have received the requested amount.
You will repeat the same process for month B, except that you’ll create a new invoice that lists four graphics instead of three and request the payment for each.
If you find the process hectic, we recommend using automatic invoicing software to make things easier. Invoice Ninja can help you create and send professional-looking invoices without requiring you to spend hours on your laptop. Plus, you can reuse them for recurring payments.
Who Receives Invoices and Receipts?
After a business transaction is complete, the buyer receives an invoice. Once they make the payment mentioned in the invoice, they receive a receipt confirming the transaction by the seller.
When it comes to requesting invoices and receipts, however, either party can take the lead. In some cases, the seller issues the invoice to the buyer. In other cases, the buyer may request an invoice.
Similarly, a receipt may be issued by the seller or service provider upon receiving payment, or it may be requested by the buyer or paying party as proof of payment.
Key Elements of an Invoice
The key elements of an invoice include:
- A unique invoice number
- Seller and buyer details
- Issue date
- Due date
- List of products/services delivered
- Description of each product/service, including cost per unit
- Total amount due
- Applicable taxes
- Payment terms and conditions
- The seller’s account details
Key Elements of a Receipt
The key components of a receipt include:
- Sale date
- Seller and buyer details
- Description of the goods or services purchased
- The total amount paid, including taxes and any additional fees
- Payment method used to pay
Can an Invoice Serve as a Receipt?
No, an invoice cannot serve as a receipt, because it doesn’t offer proof of payment or verify that the buyer has cleared the dues.
Is a Cash Invoice a Receipt or a Payment?
A cash invoice usually represents a purchase on credit, meaning the buyer is liable to pay some amount. Once the buyer clears the dues, the seller issues an official receipt, which confirms the payment has been cleared.
What to Do if an Incorrect Invoice Is Issued
If you issued an incorrect invoice, reach out to your client, inform them of the error, cancel the invoice, and issue a new one. Make sure you record the invoice number of the erroneous invoice. If your client has cleared the invoice, adjust the next invoice as needed, and inform your client of the mix-up.
Paperwork can be complicated, but by keeping a few simple things in mind you can make life easier for both you and your clients.
For more helpful invoicing information, be sure to read our post on if an invoice is a bill.