People often assume that invoices and sales receipts are the same, but they are not. To clear off your cloud of confusion, let us explain in detail the difference between an invoice and a sales receipt.
An invoice is a physical or digital document issued by the seller to the buyer indicating the number of products, pricing, and terms of payment. Business owners can set up terms of payment, stating the duration the clients can defer the payment. If they fail to pay within the specific time frame as agreed based on the credit terms, the invoice is considered overdue.
The seller issues a sales receipt to the buyer after the buyer makes the payment. A receipt is to inform the buyer of the amount they paid for the products they purchased.
To sum up, the main difference between an invoice and a sales receipt are:
- The invoice is an order for payment, and the sales receipt is a confirmation of payment.
- The invoice is issued before any payment is made, whereas the sales receipt is issued after payment is received.
A client purchased ten units of Macbook computers from your company. You would issue them a document known as an "invoice," indicating the number of computers, the total amount to pay, and the terms of payment.
Upon receiving the ten units of computers, your client will make payment based on the total amount shown in the invoice. In return, you will issue them a sales receipt as a confirmation of payment.
Learn Everything you need to know about invoices in the next article.