Invoice vs receipt: what's the difference?
Short answer: one asks for money, the other confirms you received it. Here is when to use each and what goes on them.
The short answer
An invoice is a request for payment, sent before the money arrives. A receipt is proof of payment, given after it arrives. For a shop sale they happen at the same moment, which is why people mix them up.
What goes on each
| Request for payment | Receipt | |
|---|---|---|
| Main purpose | Ask the client to pay | Confirm they paid |
| Key dates | Issue date, due date | Payment date |
| Amounts | Amount due | Amount paid |
| Extra details | How to pay | How they paid (card, transfer, cash) |
| Marked | Unpaid / due | "Paid" |
Turning a bill into a receipt
Once you are paid, you can issue the same document again with "PAID", the payment date, and the payment method added in the notes. Keep the same reference number so the two match in your records.
Do you need both?
Many business clients only need the bill. Clients who pay in cash, people claiming expenses back from an employer, and anyone who needs proof for a warranty often ask for a receipt as well. If someone asks, send one; it takes a minute.
How long to keep them
Keep copies of both for your tax records. How long depends on your country: the IRS generally suggests keeping records for at least three years, and some situations need longer, while the UK and many EU countries expect around five to ten years. Check your local tax authority's guidance.