What is the difference between Receipt and Invoice?

Some people tend to incorrectly use receipt and invoice when doing business. These two words do not have the same meaning and are far two different words that are important not to be used improperly. A receipt is an official acknowledgment prepared and given by the seller to the buyer that goods or services have been received.

This is usually handed after a successful transaction between the two that include the goods or services rendered, price, mode and terms of payment. Invoice, on the other hand, is a request of payment before the transaction. This usually contains the quantity, unit price, discount, and taxes if any, and total. This serves as a record that merchandise will be sold but payment is not yet due.

The main difference between the two is that the invoice is normally issued before the payment can be sent while the receipt will be given after the payment has been received. The invoice is normally used in order to track the goods or the services that are sent out by the business.

For example, as a business owner, you would list down all of the orders of your client. You will send the invoice to your client so that he will also know how much he would need to pay. The moment that he pays the amount, you will be giving him a receipt as proof that you have already received the payment from him.