Confused about invoices and receipts? Learn the critical differences, legal requirements, and when your business should use each document.
What is an invoice?
An invoice is a request for payment sent before or after services are completed. It lists services provided, costs, payment terms (like Net 30), and payment instructions. Invoices are legal documents that establish payment obligations. They're essential for B2B transactions, service businesses, and any situation where payment isn't immediate.
What is a receipt?
A receipt is proof that payment was received. It's issued after payment is complete and confirms the transaction. Receipts show the payment method, date, amount paid, and what was purchased. They're required for expense tracking, tax deductions, and customer records. Every business must provide receipts when payment is made.
Key differences explained
Timing: Invoices are sent before payment; receipts after. Purpose: Invoices request payment; receipts confirm it. Legal status: Invoices create payment obligations; receipts prove obligations were met. Information: Invoices include payment terms and due dates; receipts show payment method and confirmation. Use invoices for credit transactions; receipts for immediate payments.
When to use an invoice
Use invoices when: providing services over time, offering payment terms (Net 30), working with business clients, billing for projects or milestones, allowing multiple payment methods, or needing to track accounts receivable. Professional service providers, agencies, consultants, and B2B companies primarily use invoices.
When to use a receipt
Use receipts when: payment is made immediately (in-store, online), confirming subscription payments, documenting cash transactions, providing proof for warranties or returns, or meeting tax documentation requirements. Retail stores, restaurants, e-commerce sites, and point-of-sale transactions require receipts.
How InvoiceFlow handles both
InvoiceFlow automatically generates invoices with payment terms and professional branding. Once clients pay, it instantly creates receipts with payment confirmation and sends them to both you and your client. Everything is tracked in one place—no manual work needed. Perfect for businesses that need both invoicing and receipt management.
Keep momentum after every invoice
InvoiceFlow automates approvals, nudges clients when payments slip, and surfaces the metrics you need to stay cash-flow positive.