A Quick Guide to Invoices Vs Receipts

It can be confusing keeping on top of all the financial administration for your business, especially when you’re doing all the work yourself, without a team of experts in a financial department.  Even the language can be misleading with many people confusing the names for an invoice and receipt despite the fact, they’re two different documents that have two very different purposes.
Understanding the differences between invoices and receipts is crucial for keeping your financial records in good order and making sure you have simple, quick and easy payment processes between your clients/customers and your business.

This quick guide covers some of the basic questions you might have about the differences between invoices and receipts, so you’ll know which to issue and when they’re required for your customers or from your suppliers.  If you’re in doubt at any time we recommend speaking to an expert, such as an accountant, to ensure you’re compliant with the law and fully prepared for your next tax return.

What Is An Invoice?

An invoice comes at the beginning of the payment process and provides a record of the sales transaction for your business.

An invoice is a document issued by you (the seller) to your buyers (customers/clients) that lists the products or services being provided and their costs. Your invoices are a formal request for payment and should outline the important details you customers need to know.  This includes terms of sale (payment date etc), payment methods, discounts, late payment fees and other essential information.


Do I Have To Provide An Invoice?

According to the UK government website…

If you sell a customer a product or a service, you need to give them an invoice (bill) by law if both you and the customer are registered for VAT (a business to business transaction).”

Even if you aren’t registered for VAT because you fall below the threshold, we recommend you issue invoices as good record keeping for your business. Failing to keep a record of your sales can cause serious complications for your business including payment disputes with customers or when you have to produce evidence for your tax return.


What Information Does An Invoice Include?

There are government guidelines for the type of information that should be included in your invoices:

  • A unique identification number
  • Your company name, address and contact information
  • The company name and address of the customer you’re invoicing
  • A clear description of what you’re charging for
  • The date the goods or service were provided (supply date)
  • The date of the invoice
  • The amount(s) being charged
  • VAT amount if applicable
  • The total amount owed


If you are a sole trader you must include your name and any name you are using (trading as), as well as an address that legal documents can be sent to.

What Is A Receipt?

Unlike an invoice, which is sent at the beginning of the payment process, a receipt is sent at the end as evidence that the financial transaction is completed.

A receipt is a document issued by you (the seller) to your customers/clients (the buyer) after payment has been made and received. It serves as evidence of payment and confirms that the buyer has fulfilled their financial obligation for the products or services they received from you. 


Do I Need To Provide A Receipt?

Under UK law, you don’t have to provide a receipt for your customers/clients.  If there is a dispute raised, even if that dispute goes to court, word-of-mouth alongside other evidence such as bank statements are accepted when coming to a judgement.

This is also true for your tax returns where other documentation can be used to evidence payment/income being received or paid.  In fact, HMRC document states the evidence for expenses can be “receipts or other records showing dates and amounts of payments you made.”

If it’s possible to get receipts from your suppliers, we recommend you obtain these, especially if the item can be ambiguous, such as whether it could be for personal or professional use.


What Information Does A Receipt Include?

Although there are no legal requirements for you to produce a receipt, if you do need to send one, we recommend you include the following details:

  • Contact Information – Your name, business name and address
  • A receipt number (this can correspond with the invoice number)
  • Important dates – date receipt was issued and also payment received
  • Specifies the products or services purchased, including quantities, prices, and total amounts.
  • The payment method used (cash, credit card, check, etc.), along with any relevant transaction details.
  • Total payment amount received of all items purchased, taxes, and additional charges, providing the total amount paid by the buyer.
  • Signature if handwritten receipt or an acknowledgement to confirm payment received

Summary Of The Main Differences Between An Invoice And A Receipt.


Despite some confusion over using the names interchangeably, an invoice and a receipt are different documents that both play an important role in the payment process, but serve very different purposes at opposite ends of your financial transactions.

It’s important you understand the main differences between an invoice and a receipt, so you can keep accurate financial records, enable quick and easy payments and ensure best practice with accounting procedures and compliance with HMRC legal requirements.

Getting to grips with doing your own invoicing accurately goes beyond paperwork, it helps improve your cash flow, creates great client/customer relationships and saves you worry, time and money.

Using an online invoice generator like InvoiceNet can take the headache out of creating and sending your invoices by doing the heavy lifting for you.


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