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The Difference Between an Invoice and a Receipt

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Miranda Russell | September 16, 2021

“Knowing the difference between an invoice, receipt, bill and a statement can help your business service customers more efficiently and accurately track requests.”
6 min read

    What is an Invoice?

    An invoice is a document that you provide to your customers when you want to collect payment from them for a product or service. Whenever your business is providing goods or services that will be paid for on a specific date, you can send an invoice which details what's 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 the product or service is offered and when the payment is due.

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

    Related: The Basics Of Invoicing.

    What is a Receipt?

    When you provide a customer with a receipt, you are providing them with a written record confirming that they've paid for a product or service. A receipt should include a description of each of the individual products purchased 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 a payment.

    Example of what a receipt should include: When a pays for renovation work, their receipt should detail what items or work they paid for and the total amount that they paid to the business.

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    What is a Statement?

    A statement is a summary provided to customers that details services or products purchased over a specified period of time (most often a month). Statements provide a detailed breakdown, line by line, of the different items a customer received during the statement period. A statement vs. an invoice: a statement will not include an amount due whereas an invoice will list products/services and indicate how much payment is required.

    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.

    Example of a statement: If a customer completing a 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 time frame.

    What is a Bill?

    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. Customers might refer to an invoice they received from a business as a bill.

    Generally, the difference between an invoice and a bill depends on who is talking about it. Also, depending on the context, an invoice may be sent before or after a job is done with a future due date, while a bill (like in the case of a restaurant bill) is usually delivered and due immediately.

    Example of a bill: 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 when 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.

    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.

    Example of an estimate: 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.

    Example of a quote: 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? Explanation of an 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.

    What is a 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 providing the products or services.

    Example of a purchase order: 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 a customer decides not to go forward with the work they can be held responsible for paying for the materials they requested.

    Final Thoughts

    Making yourself familiar with some of the types of documentation used for purchases can help you sort through the "paper trail" that comes with making and accepting payments. Usually the differences are fairly miniscule, but they can be important to mark so that you and your customer are both aware of how their purchases are being accounted for.

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