What is the difference between an invoice, a bill, and a receipt?

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What is an invoice?

An invoice is a document issued by a business to their customer to advise them

that payment is now due. Invoices are usually issued once the product or
service has been supplied, and it is now time for the customer to pay up.

Invoices are legal accounting documents which require certain information to

be valid. This includes the business and customer details, an invoice number,
the products or services sold, and the payment terms.

What is a bill?
A bill is a general term that can refer to a number of different documents,
including an invoice. A bill usually outlines how much the customer owes to
the business.

Unlike an invoice, the term “bill” does not refer to a specific sales document.
Some people use the term “bill” to describe an invoice from the customer’s
end. For instance, a business issues an invoice to a customer, and the
customer receives it as a bill.

Therefore, if you are referring to a specific document, you should call it by its
official name to avoid confusion (quotation, invoice, proforma invoice, etc.).

What is a payment receipt?

A payment receipt is a document issued from the seller to the buyer once
payment has been received. It usually includes the seller’s details, the date, the
amount paid, and any remaining balance due.

Payment receipts can be issued for full payments or partial payments. Any time
money is transferred, a payment receipt should be issued.
Difference between an invoice, bill, and payment
receipt example

The main difference between a payment receipt and an invoice is when they
are issued. An invoice is issued prior to receiving payment, while a receipt is
issued after receiving payment. A bill does not describe a specific sales
document, but usually means an invoice or breakdown of the sale.

For instance, a custom dressmaker has completed a job for a client and has
issued an invoice which outlines how much needs to be paid, how it should be
paid, and when. Payment terms vary based on each business and industry but
are usually between 0-30 days.

The customer receives the invoice and makes a bank transfer as per the
payment terms. The next day, the dressmaker receives the money in their bank
account and issues a payment receipt to the customer confirming that the
money was received.