Invoice vs. Receipt
They look similar, but they serve opposite purposes in the accounting cycle. Here is everything you need to know.
The Invoice
- Timing:Before payment
- Purpose:Request payment
- Action:"Please pay me"
The Receipt
- Timing:After payment
- Purpose:Proof of payment
- Action:"You have paid"
Detailed Comparison
| Feature | Invoice | Receipt |
|---|---|---|
| Issued by | Seller / Vendor | Seller / Vendor |
| Issued when? | When work is done, but unpaid | Immediately after receiving money |
| Total Amount | Positive (Amount Owed) | Zero Balance (Amount Paid) |
| Legal Meaning | Demand for payment | Proof of ownership/payment |
When to Send Which?
Send an Invoice when:
- You have completed a freelance project.
- You have shipped goods that will be paid for later (Net 30).
- You are requesting a deposit for future work.
Send a Receipt when:
- A client pays an invoice (send a "Payment Receipt").
- A customer buys something in-store or online instantly.