What's the difference between a receipt and an invoice?

As a business owner, you’ve likely heard of the terms ‘invoice’ and ‘receipt’. However, the difference between these documents isn't always clear. 

Invoices and receipts are both documents that are issued during the sales process, but they each have different functions.

This article explains what invoices and receipts are, how they differ and what information needs to be included on them. A sample invoice and receipt are also provided.

What is an invoice?

An invoice is a document issued by a business to its customer once it’s time for the customer to pay for the provided goods or services. It’s an official request for payment and also acts as a proof of sale for your business and your customer.

Since invoices are official business documents, there are mandatory invoice fields that need to be included in them. This includes your business and customer’s name and address, an invoice number, the date of issue, the payment due date, a breakdown of the goods or services sold and the total amount due. 

If your business is registered for VAT in the UK, you’ll need to issue a VAT invoice which includes further VAT information. 

Invoices are usually issued after the goods or services have been provided, but before the payment has been received. However, it is also possible to issue an invoice after the payment has been made, in place of a receipt.

What is a receipt?

A receipt is a document issued by a business to its customer after the customer has paid for items or services. It acts as a proof of payment for both your business and the customer.

Payment receipts should include your business details, the original invoice number (if applicable), the date of payment, the amount paid and any remaining balance.

Any time a payment is received from a customer, a receipt should be issued. This includes deposits or partial payments. 

The difference between an invoice and a receipt

Invoices and receipts have different purposes as they’re issued at different stages of the sales process. Invoices are commonly issued prior to the customer sending the payment, whereas a receipt is issued after the payment has been received. The invoice acts as a request for payment, and the receipt acts as a proof of payment. 

This also means each document requires different information. The invoice should include a detailed breakdown of the products and services, whereas the payment receipt only needs to show the amount paid and any balance due. Both documents should be clearly labelled as “Invoice” or “Receipt”. 

Since invoices offer more information than receipts, businesses can opt to send a paid invoice in place of a receipt. It should be clearly marked that the remaining balance due is 0.

Do I need to issue both an invoice and a receipt?

Depending on your industry and business structure, you may not need to issue both an invoice and a receipt. 

In the UK, invoices are only mandatory if both your business and your customer are registered for VAT. However, most businesses, regardless of VAT status, opt to issue invoices for business-to-business (B2B) sales to keep a thorough record of their income for tax purposes. 

You can find more information about which sales need an invoice and when it’s recommended in our article: "Which sales require an invoice?"

Receipts, however, should be issued any time a payment is received from the customer. If you’re accepting a payment that is made immediately upon providing the goods or services, you don’t need to issue an invoice, but can offer a receipt as proof of payment. 

This is both for the customer's benefit, and your own. It reassures the customer that they've paid correctly and ensures your business keeps track of which payments have been made. 

In some cases, like in restaurants, the customer may decline a receipt. This is also fine, but it’s important that it was offered. 

Sample invoice

Below, you’ll find an example of an invoice created with SumUp Invoices. All of the mandatory invoice fields are included, and an online payment link is added so the customer can pay instantly online. 

Sample receipt

Here’s an example of a receipt issued through SumUp. The business details and amount paid is included. This is an example of a receipt for a sale that didn’t require an initial invoice. Therefore, the original invoice number isn’t included. 

How do I create invoices and receipts with SumUp?

SumUp offers a variety of business solutions, including invoices and payment receipts. 

With SumUp Invoices, you can create invoices using an online template and send them directly to your customers via email, WhatsApp, text or another method.

SumUp offers several different payment options including card readers, payment links and QR codes. Each time you accept payment from a customer, you have the option to send a receipt to the customer’s email or print it with a card reader printer. 

If your customer pays an invoice via the invoice payment link, the receipt will include the original invoice number. If your customer pays via another method, like a card reader, this will exclude the invoice number. 

SumUp is therefore ready to offer a solution for every business, whether you issue invoices or not.