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Relationships between business owners and customers involve a lot of communication regarding customer inquiries and orders for products and services.

Being able to provide the correct documentation and records for purchases can help customers get the information they need about the products or services they are purchasing. Accurate documentation can also help your business track and request payment for goods and services and streamline your cash flow. Here are the definitions and uses for common types of business documentation such as invoices, receipts, bills, and statements that customers may be expecting from your business.  

What is the difference between an Invoice, Receipt, Bill, and a Statement? 


An invoice is a document that you, as the business owner, provide to your customers when you want to collect payment from them for a product or service that you provided. Whenever your business is providing goods or services that will be paid for on a specific date, you would send an invoice that details what is being sold, the total amount owed, and the due date of the payment. Invoices are commonly used by business owners when there is a period between when a product or service is offered and when the payment is due. 

Related: The Basics Of Invoicing

For example: If a customer has a new floor installed in their home, the invoice would include the cost of the flooring, labor cost, taxes and due date of the payment. They may receive the invoice before the job begins with the due date set for once the work is complete.


A bill is very similar to an invoice and sometimes the two terms are used interchangeably. Like an invoice, a bill is a written summary of the amount of money owed for products or services prepared by the business providing those products or services. Generally, the difference is that an invoice is sent, while a bill is received. A bill is essentially an invoice that is received by a customer from a business requesting payment. Sometimes when a customer is presented with a bill for a product or service the expectation is that they will pay it immediately, like paying a bill at a restaurant. 

For example: When a flooring project is complete the business who did the work will send the customer an invoice that details what work was done and the total cost for the project, but the customer would receive it and refer to it as a bill. Upon receiving the bill, the customer will make the payment to the business owner.  

An example of where a business may refer to an invoice as a bill would be an architecture or design firm "billing" a client for their employees' time spent on a project. 


When you provide a customer with a receipt, you are providing them with a written record confirming their payment for a product or service. A receipt should include a description of each of the individual products and their costs, along with the total cost and tax that is applied to the order. Receipts are given to customers only after they have made the payment.

For example: When the customer who is completing the flooring project pays for the work, their receipt should detail what items or work they paid for and the total amount that they paid to the business.


A statement is a summary provided to customers that details the services or products they purchased over a specified period of time, most often a month. The statement provides a detailed breakdown, line by line, of the different items the customer received during the statement period. Statements can be helpful for customers who have made multiple purchases or transactions between payment dates, so they can reconcile what they have purchased and review what they owe and why.

For example: If the customer completing the flooring project decides to do work on several different locations or rooms, then their statement is a useful reference for them to see what work was done for which areas and in what timeframe.

Is there a difference between an Estimate and a Quote?


If you’re doing work or providing a service where you do not have all the details for the job, you might provide your customers with an estimate. Estimates are great for customers who want to see what the price of a job might be before it’s completed so they can get an idea of the approximate cost and either plan for the payment, or compare it to another estimate. Because estimates are informal documents outlining your best estimation of the price, once the work is complete, you can adjust the final cost on the customer's bill. The final cost may be higher or lower than the estimate you originally provided.

For example: If a customer is wanting to complete a flooring project for their home, they might call you for an estimate. Because you haven't seen the room for the project, your estimate would be based on the size of the room the customer tells you and your estimated labor costs for removing the current flooring and installing new flooring.


If a customer asks for a quote on a service or for an item, you can provide them with a written document referencing what the cost of the work will be. Quotes should involve the specifics of the purchase the customer might make, and you should collect the exact requirements for the job by completing an on-site visit prior to providing a quote. Customers who are completing projects that have a significant expense associated with them may get a quote before agreeing to the work, so they know ahead of time what the job is going to cost them. Quotes are binding documents, and you cannot change the price once the customer has agreed to it, so it is very important to ensure they are accurate.

For example: If a customer wants to know how much a flooring project will cost them, you would send an employee out to measure the area of the project and determine how long it will take to remove the existing flooring and reinstall new materials. Once these factors have been determined you would issue a quote to the customer with the cost for the project.

What is the difference between an Order and a Purchase Order?


If a customer makes a request for a product either verbally or through a written form, then they are submitting an order. When a customer submits an order, they are expressing their intention to make a purchase.

For example: If the customer completing the flooring project decides they want to do the work themselves, but they still want to purchase the flooring supplies from your business, they could contact you to place an order for specific materials.

Purchase Order

A purchase order, or "PO," is a formal written document that details a transaction between a customer and your business for the items or services that they are buying. The purchase order is a commercial document and is used to clearly communicate the details of an order to a company. This streamlines the ordering process for that business and helps them track which orders are coming in to help manage inventory. Finally, purchase orders are considered legally binding once they are accepted by the business who is providing the products or services. 

For example: Before a customer starts work on their flooring project, the company doing the work might submit a purchase order to a supplier, so they can bring in the materials needed for the floors. Because the purchase order is legally binding if the customer decides not to go forward with the work they can be held responsible for paying for the materials they requested.

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