More often than not, we as consumers tend the use the words ‘invoice’ and ‘receipt’ interchangeably during our transactions without really knowing the difference between them.
First, we need to realise that they are both legal documents used by both the seller and buyer in any economic/commercial transaction that involves the exchange of goods and services.
QUICK ANSWER!!!
A receipt is a commercial or economic document issued by the seller to the buyer in acknowledgement of the payment for the goods and services provided by the buyer to the seller, while an invoice is also a commercial or economic document issued by the seller to the buyer that shows the details of the goods and services provided by the seller to the buyer and also the agreed price to be paid for such services by the buyer.
WHAT IS A RECEIPT?
A receipt is a document that is provided by the SELLER to BUYER as proof of the transaction AFTER the payment of goods and services by the BUYER. Receipts entail information of the goods or services that were provided by the SELLER to the BUYER, examples of such information is the total amount paid by the buyer, quantity of goods or services bought, discounts if any, taxes, mode of payment and also the date and time the transaction took place. These receipts are either printed by the SELLER to the BUYER or are sent electronically as an email to the BUYER.
WHY DO WE NEED A RECEIPT?
Receipts are an important part of any financial transaction as they serve as proof to both the BUYER and SELLER that a successful transaction of goods and services has taken place between them and also that payment for such goods and services has been made by the BUYER to the SELLER.
Receipts also serve as proof in case the BUYER wishes to return or exchange goods to the SELLER. n order for the return or exchange to take place a receipt is demanded by the SELLER usually after a certain time frame as stipulated by the SELLER or the receipt becomes invalid and such exchange or return can no longer be made.
WHAT IS AN INVOICE?
An invoice is a document provided by the SELLER to the BUYER after successfully providing goods or services but before payment has been made by the buyer. In essence, one can call an invoice a demand for payment for services rendered. It usually contains information like the total amount due, details about the goods and services rendered, date of completion, discount, taxes and account payable to. Invoices can be sent out electronically via email or physically.
WHY DO WE NEED AN INVOICE?
Invoices are important, as they provide legal proof of goods and services rendered by the SELLER to the BUYER. It helps to show a buyer that he/she has a legal obligation to pay the seller for services rendered and also provides a convenient way for the SELLER to pay the BUYER.
Also, as wild as this may seem issuing out invoices shows your clients/customers how serious you are about the transaction and your business as a whole, it shows how much of a professional you are and things like this give you a competitive advantage in the business world. They can also serve as a form of marketing your business if the invoice is branded right.
| FACTORS | RECEIPT | INVOICE |
|---|---|---|
| DEFINITION | A receipt is an economic document issued by the seller to the buyer in acknowledgement of the payment for the goods and services provided by the buyer to the seller | An invoice is an economic document that shows the money that is owed by the buyer to the seller for goods and services provided by the seller. |
| USE | Acts as proof for a successful payment of goods and services provided by the seller to the buyer | Provides the information of goods and services provided by the seller to the buyer and the amount of money that is owed by the buyer to the seller. |
| DELIVERY | This document is issued after a successful payment of goods and services | This document is issued before a successful payment of goods and services provided |
