Businesses use lots of terms interchangeably. But is it correct to do so?
Two commonly interchanged terms are Receipts and Invoices.
Though the purpose of both of them is to fetch payments, they differ to some extent.
Whether you are a new business owner or run an established firm, it is best to know the difference between these two terms and protect yourself from engaging in unwanted complexities.
What does a Receipt Mean?
A receipt is a document proving a purchase. Some businesses offer a paper slip, while others provide a printed one.
A receipt is used as proof that a service or product has been purchased from a particular business. Hence, it is received at the point of sale, like restaurants, salon, or grocery store.
If you write off expenses on taxes, it is important to keep a receipt.
What Details are mentioned on Receipts?
In addition to including vital details about a purchase, like an item brought or amount, a receipt includes more other details. For instance, your business name, phone number, store number and address.
For a franchise business, there are unique store numbers allocated to each to keep track of items you purchased from a particular franchise.
Also, it includes a form of payment, like credit card or cash. For payments made with cash, the amount paid and cash received is shown. For payments made with plastic money, it shows the digit of the card used.
There are not many details mentioned in the receipt to protect identity theft of customers. It is because usually, customers throw away the receipts.
What does an Invoice Mean?
An alternative to receipt is an invoice, which is a document created by a business to request payment from a client. A common term for the invoice is a bill.
Some of the businesses mail out an invoice, while others use electronic format to send them.
Similar to a receipt, an invoice contains details about the seller. Also, it includes sensitive details about the buyer. The aim of an invoice is to allow a client to know how much money they have to pay.
What Details are mentioned on Invoices?
An invoice contains details about the buyer and seller. Most of them are formatted with seller details being mentioned in the upper corner of the invoice.
It includes address, name, logo, phone number, and email address of a business. Same details about the business excluding logo are mentioned outside and provided to the customer. Such information is usually available on the side opposite to details of the seller.
The invoice also offers details about the services or products bought as well as a small description of each. Next, to these items, the rate and number of items purchased are mentioned.
Finally, at the bottom, the total of everything is mentioned.
Invoices also contain important details like fees or discounts applied, their due date, date of invoice and payment method.
When an Invoice is used?
An invoice can be used under numerous circumstances by businesses. For instance, if you order a service or product online, you are likely to receive an invoice through email.
Also, it is commonly used by suppliers to send product details to customers, which they order on the web or over the phone.
The invoice is proof of order as well as details what is owed and by whom. Commonly, invoices are used when a business offers a service or product in advance of payment.
Should Businesses Keep Receipts or Invoices?
Businesses must keep receipts for the purpose of recordkeeping during taxation. The same must be done for invoices.
Keeping invoices safe lets you keep track of sales made till date. Also, it lets you see which is late or pending. For this reason, many businesses nowadays prefer using electronic invoices.
Electronic invoices come with a dashboard, which you can use to see all invoices in one place. It includes paid, late and pending invoices as well. Moreover, all sales are recorded so that you can track your revenue. You may also include expenses for services offered by you, and the same is recorded.
Stay Organized with E-Invoices
The modern solution to your billing and invoicing process is e-invoices. Such invoices can be generated using an online invoice generator like Bills99.
With such invoices, it is easier to track, create, and get paid for services and products you offer. If you want a streamlined, efficient, and quick invoicing process, use Bills99 right now.