What is a payment receipt?
A payment receipt, also known as a receipt of payment, is a document issued from a business to its customer when they have received payment for provided goods or services.
Payment receipts should be issued every time a payment is made on a sale - even if it's a deposit or partial payment. Payment receipts let the customer know that you have received the payment and if there is any remaining balance due.
This article explains which details should be included on a payment receipt and why you should issue them. A sample payment receipt and a free payment receipt template are also provided.
How to write a receipt of payment
In the UK, there are no formal requirements for payment receipts. Nonetheless, we recommend including the following information on your payment receipt template:
The label “Payment Receipt”
Your business name and contact details
The original invoice number
The payment date
The amount paid
Any remaining balance due
If the invoice has been fully paid and no further balance is due, it would be beneficial to clearly state “Invoice Paid” on the receipt to avoid any misunderstanding. You may also consider customising your payment receipts with your logo to add a bit of colour and market your business.
Is it mandatory to issue a payment receipt?
In the UK, it’s not a legal requirement to provide a payment receipt. However, most accountants and business experts would advise you to do so. It’s therefore relatively common to provide your customer with a receipt of payment, and if it’s requested, it’s normal to oblige.
Depending on your industry, payment receipts may be handled differently. Therefore, take the time to research what is common practice and how to write a receipt of payment for your line of work.
The benefits of issuing payment receipts
Payment receipts are beneficial to both the customer and your business. The most obvious advantage is that they let the customer know that their payment has been received and if the invoice has been paid in full or if there is a remaining balance owed.
However, your business also benefits from payment receipts. They provide proof of payment for your sale and help with complete and correct recordkeeping and reconciliation.
The difference between an invoice and a payment receipt
Invoices and payment receipts serve different purposes and are issued at different stages of the sales process.
Invoices are a formal request for payment issued when the sale is confirmed and payment is due. Payment receipts act as proof of payment issued after the payment has been received for the invoice.
Payment receipt example
Below is a sample payment receipt for a design business. All of the recommended fields are included and it’s also customised with the business’s logo.
How to create a receipt of payment
There are many ways that you can create payment receipts. Many businesses use Word or Excel, while others use invoicing software.
The advantage of using invoicing software to create payment receipts is that they will be linked to the original invoice and the payment will be reconciled with its corresponding documents. This keeps your books up to date and will help you easily complete your tax return.
Payment receipt template for Word
If Word is your software of choice, we have provided a free payment receipt template for download below.
You’ll need to manually type the fields such as the date, amount, and invoice number. You can also include your own logo to market your business and customise the document in any way you choose.