As a business owner, you’ve probably used invoices and receipts before. They both are a record of sales and can help you track every transaction within your business and organize your payments. But are they the same thing?

While these documents have some similarities, they’re used for different purposes. This quick guide will help answer your questions about the differences between an invoice vs. receipt so you can use them appropriately within your business.

What is an invoice?

An invoice is used when a business has completed a customer’s order and needs to collect payment for the goods or services provided. As a business owner, you would send an invoice to notify a customer that payment is due. 

Many service providers use invoices for B2B transactions, consulting services, and property management. They look similar to a bill and list the services and goods you provided. 

For example, if you own a construction company and renovated a customer’s garage, you’ll likely send them an invoice before they pay. You’ll list the services provided, the required materials, and the payment amount.

How to write an invoice

Invoices include detailed information about the goods and services you provided. 

Here’s how to write an invoice: 

1. Add your business name, contact information, and logo. 
2. Write down the customer’s name and contact information. 
3. Include the invoice number, the date you created it, and the date of service. 
4. Describe the goods or services provided, including price and quantity. 
5. Spell out the payment information, including payment due dates, total amount, and acceptable forms of payment.  

You can also add a message to the customer at the bottom of the invoice.

What is a receipt?

A receipt is used as proof of payment when a customer makes a payment to a business for goods or services. You are required to provide a receipt after the payment is made to serve as a record of the sale. Receipts are also important supporting documents for tax season as they support the entries in your books and tax return. 

Receipts outline when a transaction took place, how much the customer paid, and the payment method used, as well as the items or services the customer paid for. Receipts help both you and the customer keep track of completed payments. 

Since receipts indicate proof of purchase, businesses can use them to verify a transaction in case there’s a problem with the purchase, and it needs to be refunded. 

Businesses of all types use receipts and generally issue them for any completed payments. For example, after the customer pays the invoice issued for the garage renovation, you’ll then give them a receipt listing the payment information.

How to write a receipt

There are different types of receipts, from cash register receipts to email receipts. Here’s what they should include:

1. Add your business name and contact information. 
2. Include the transaction number or order number.
3. List the goods or services provided, including price and quantity. 
4. Note the payment date and the total amount paid, including taxes, fees, and discounts. 

Some receipts will also include the customer’s contact information and payment method, as well as the return policy. Fortunately, you might not need to worry about creating a receipt as many payment tools automatically generate receipts when a customer makes a payment.

Key differences between invoices and receipts

While invoices and receipts have some similarities, they’re used at different stages of the sales process and document different information. The main differences are: 

• When they’re issued: Invoices are issued before a business has received payment from a customer, and a receipt is issued after payment has been collected.
• Payment information they contain: Invoices contain information about a future payment, including how to pay for it and due dates. Receipts contain information about a completed payment, including the date and amount paid.
• How they’re used in accounting: Receipts record a completed sale, so you’ll record them as income. Invoices mean the customer still has to pay you, so you’ll record them as accounts receivable. 

This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.

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