What's the difference between a receipt and an invoice?

As a business owner, you’ve likely heard of the terms ‘invoice’ and ‘receipt’. However, the difference between these documents isn't always clear. 

Invoices and receipts are both documents that are issued during the sales process, but they each have different functions.

This article explains what invoices and receipts are, how they differ and what information needs to be included on them. 

What is an invoice?

An invoice is a document issued from a business to a customer once it’s time for the customer to pay for the provided goods or services. It’s an official request for payment and also acts as a proof of sale for your business. 

Because invoices are official business documents, there are mandatory invoice fields that need to be on them. This includes your business and customer’s name and address, an invoice number, the date of issue, the payment due date, a breakdown of the goods or services sold and the total amount due. 

If your business is registered for sales tax, you’ll need to issue a tax invoice that includes further tax information. 

Invoices are usually issued after the goods or services have been provided, but before the payment has been received. However, it is also possible to issue an invoice after payment has been received. 

What is a receipt?

A receipt is a document issued from a business to a customer after the customer has paid for items or services. It acts as a proof of payment for both your business and the customer.

Payment receipts should include your business details, the date of payment, the amount paid and any remaining balance.

Any time a payment is received from a customer, a receipt should be issued. This includes deposits or partial payments. 

The difference between an invoice and a receipt

Invoices and receipts have different purposes as they’re issued at different stages of the sales process. Invoices are issued prior to the customer sending the payment, whereas a receipt is issued after the payment has been received. The invoice acts as a request for payment, and the receipt acts as a proof of payment. 

This also means that each document requires different information. The invoice should include a detailed breakdown of the products and services, whereas the payment receipt only needs to show the amount paid and any balance due. Both documents should be clearly labelled as “Invoice” or “Receipt”. 

Do I need to issue both an invoice and a receipt?

Depending on your business location, industry and business structure, you may not need to issue both an invoice and a receipt. 

Invoices are only mandatory in certain circumstances. However, most businesses opt to issue invoices for all sales to keep a thorough record of their income for tax purposes. 

If you’re unsure if it’s mandatory for your business to issue invoices, you should check your government’s website or speak to a qualified accountant. 

Receipts, however, should be issued any time a payment is received from a customer. 

This is both for the customer's benefit, and your own. It reassures the customer that they've paid correctly, ensures your business keeps track of which payments have been made and keeps your business compliant with regulations. 

How do I create invoices and receipts with SumUp?

SumUp offers a variety of different business solutions, including invoices and payment receipts. 

With SumUp Invoices, you can create professional invoices in seconds and issue them directly to your customer’s email address. You can include your bank information to accept bank transfers, or choose to include a payment link to accept online payments. 

SumUp offers several different payment options including card readers and online payment links. Each time you accept payment from a customer, you have the option to send a receipt to the customer’s email or print it with a card reader printer.

SumUp is therefore ready to offer a solution for every business, whether you issue invoices or not.