What is Receipt or An Invoice, what makes them important?

Often, we are asked the question of what a receipt or an invoice is. Most people do not have the concept of what a receipt & invoice is, especially when it comes to the differences between each.

We will outline exactly what both are, the differences, and how the best way to handle them.

What is an Invoice & what is it used for?

An invoice is a letter or bill that is delivered to the client by a supplier of goods and services. Invoices list each transaction along with the terms and amounts of payments. Often, when you go to your local shops or shop online, this is most predominantly used to deliver a summary of what was purchased, price & quantity.

What is it used for?

To request payments, businesses must deliver invoices. An invoice demonstrates the parties’ agreement to the price and terms of payment in a way that is legally binding. However, using invoices has additional advantages.

Preserving records

The capacity to maintain a legal record of the sale is the main advantage of an invoice. This makes it easy to learn who purchased, sold, and when good was sold.

Payment monitoring

An invoice is a crucial piece of accounting equipment. Keeping track of payments and balances outstanding benefits both the buyer and the seller.

Legal defense

Legal evidence of a pricing agreement between the customer and seller can be found in a proper invoice. It shields the retailer from false lawsuits.

Simple tax filing

The company may more accurately record its income and make sure that the right amount of taxes are paid by keeping track of all sales invoices.

How have Invoices aged & types of Invoices?

Hand-written Invoices

Invoices back in the day were written by hand on parchment, animal skin, or paper. These invoices featured signatures or seals and included the majority of modern invoice components.

Electronic Invoices

The next significant development in billing was brought about by the invention of computers. The desire to lower labor and traditional costs led to this revolution. With the advent of electronic invoices, billing became more affordable, simple, and quick.

Online Invoices

With the development of the internet, customer communications have been better, safer, and more environmentally friendly. Since payments are made online and invoices are sent via email, online invoices are paperless.

Mobile Invoices

In today’s society, billing has become mobile. You can invoice while you’re on the go thanks to specialized SaaS (Software as a Service) providers, who make sure that invoicing is now instantaneous, secure, and automated.

Now that we know about Invoices, how about receipts?

What is a receipt & what is it used for?

A receipt is evidence of payment, whereas an invoice is a payment request. It is a document that attests to the fact that a customer received the goods or services they ordered from a company, or, in the other direction, that the company was fairly compensated for the products or services it delivered to the consumer. Receipts are almost always given to customers after they make a purchase, making them typical among both traditional and e- commerce enterprises. Receipts are not legally required to be provided for all transactions, but they are almost always given to customers after they make a purchase.

Customers may receive receipts either physically or online.
Even though some e-commerce shops may opt to physically mail it when sending the things out for delivery, many of them give email receipts to customers right away after they make a purchase.

Now we know both a receipt & an invoice, what is the difference?

What is the difference between a receipt & an invoice?

Although they are used at different phases in the sales process and record different information, invoices and receipts share some commonalities. The primary distinction between an invoice and a receipt is that the former is issued before a business has received money from a client, while the latter is issued following payment collection.

When a firm completes a customer’s order and must collect money for the goods or services are given, it uses an invoice.


While both invoices & receipts have their similarities, they are used at completely different phases in the sales process. An invoice is a request for payment whilst a receipt is proof of

payment done by the customer, client, or company. Both are used for proof of stake, proof of purchase, business analytics & legality purposes.


  1. Bragg, S. (2022, May 23). Receipt definition. AccountingTools. Retrieved August 22, 2022, from https://www.accountingtools.com/articles/receipt

  2. The difference between an invoice vs a receipt. Sana Commerce. (2022, August 4). Retrieved August 22, 2022, from https://www.sana-commerce.com/blog/invoice-vs- receipt-what-is-the-difference/

  3. What is a receipt? definition and examples. Market Business News. (2018, October 21). Retrieved August 22, 2022, from https://marketbusinessnews.com/financial- glossary/receipt/

  4. What is a receipt? definition and examples. Market Business News. (2018, October 21). Retrieved August 22, 2022, from https://marketbusinessnews.com/financial- glossary/receipt/

  5. What is an invoice. What is an invoice? Purpose, types, elements, and tips | Zoho Invoice. (n.d.). Retrieved August 22, 2022, from https://www.zoho.com/invoice/what- is-invoice/

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