Maintaining the record of every single transaction be it sales, purchase or exchange is important for business. Without the proper records, it becomes impossible to maintain financial records, calculate taxes and overall performance of the company. Along with the businesses, it is important for the customers to keep transactional records especially if any issue arises with their order or in future, they want to exchange products. These transactional documents are in the form of invoices, receipts, bills etc. and most companies use a combination of invoices and receipts to record the transactions.
Although these two documents look similar but they are entirely different from each other. These are issued at different stages in the sales process. So here in this article we are going to brief you how these two documents differ from each other and what information each one includes, and when to issue a receipt or an invoice to your customers.
INVOICE
An invoice is a document sent by a seller to his customer that requests the payment for the goods/services provided. In short, it is an official request for payment after delivering goods/services to the customer. Invoice enlists provide goods or services, their cost, and the forms of payment that seller accepts. They are commonly, sent by companies that sell in large quantities, such as manufacturers or wholesalers, and among freelance workers that provide services.
Traditionally, invoices were made manually, then printed and sent to a customer through the mail or manually, but now they can be sent digitally and directly through different invoicing software . Electronic invoices or e invoices are the best option for all businesses. Indeed, an effective online invoice management software can simplify and expedite the entire invoicing process of the businesses.
Note: Always pay close attention to your invoices, to ensure being paid correctly for provided goods/ services.
How to write an invoice?
Writing an invoice is quite easy but they are important too. It request payment as well records a transaction, so remember to include these things in your invoice.
- Your business name, logo, and contact information
- The customer’s name and contact information
- Unique invoice number
- Detailed description of all purchased goods and services, including price and quantity
- Total amount owed, including any taxes and fees
- All acceptable forms of payment
- Date the invoice was created
- Payment due date, along with payment terms
RECEIPT
A receipt is the proof of payment received by the seller. It is a document confirming that a customer received the goods or services and they compensated the seller for the same. Businesses are not legally required to provide a receipt for the transactions. They are virtually given to a customer after they make a purchase, which is common among both traditional, and e-commerce businesses.
Receipts are given either physically or sent electronically to a customer. Traditionally, receipts were usually printed or handwritten on the spot. Now, some businesses sent e-receipts via email. Especially, e-commerce businesses email receipts immediately after the customer makes a purchase, and some choose to send physically while sending the products for delivery.
Receipts are an important proof-of-purchase document for both customers and businesses. Customers need receipts in case they have any issues with a product or want to return or exchange the product and businesses need them to verify that a customer’s claims are correct. Keeping record of such receipts can be difficult manually but the good invoicing management system such as One Stop Invoicing Software makes it quite easy to track orders, and send accurate receipts.
How to write a receipt?
Creating receipts is simpler than creating an invoice and it is less detailed than invoice. They contain important information about transaction; however, they do not have a unique identification number or customer information.
Every receipt should include
- Your business name, logo, and contact information
- Price of each sold product and service
- Any discounts or coupons provided
- Total amount paid, including any sales tax or fees
- Date of sale
- An itemized list of sold products and services
Some receipts may also include the payment method, the terms of sale, or your organization’s return policy, as this information can be useful for customers to have if they wish to make a return or exchange.
Summary
So, Invoices and receipts have different purposes and 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.
Invoice and Receipt both has different information. The invoice includes a detailed breakdown of the products and services, whereas the payment receipt only shows the amount paid and due balance. Importantly label both documents as “Invoice” or “Receipt”.
