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Invoice Management

Invoice vs. Receipt: What’s the Difference?

Whenever we buy things or request services, we have to deal with sales invoices and receipts. Unless they need to be kept for tax reasons or reimbursement requests, they get crumpled in pockets, stack up on our desks or get stored away. Both may seem alike, but they have significant features that are needed for their respective purpose. That’s why we’re dedicating this guide to this specific topic: the difference between invoice vs receipt.

Invoice vs receipt: why the difference matters

Invoice vs receipt: Why the difference matters

Invoice, receipt… does it matter what we call it when it’s actually just proof of an agreement made between two parties? As HMRC would point out: There definitely are similarities, but also plenty of differences that every business owner and even private individual should be aware of. Defining the difference between an invoice and a receipt as clearly as possible helps us with accounting chores and avoids common, sometimes costly mistakes.

That being said, it is crucial to point out that invoices are usually a request for payment with listed goods or services and their respective prices. A receipt, on the other hand, is actual proof that a transaction has been made. Whether invoices are more common than receipts completely depends on the business. Restaurants, supermarkets, or bakeries hand out receipts on a daily basis, but also deal with managing invoices to fulfil larger orders or pay for products and resources. So it is very common to handle both to fit individual needs regarding the documentation of transactions for tax purposes or private matters.

Master Invoice Management
- with Moss

What is an invoice?

With the help of an invoice, people request money after having provided a service or a product. It can be delivered physically via mail or electronically as a PDF, attached to an e-mail or other forms of delivery, for example, a download platform within an online shop.

Once the seller or service provider has fulfilled their part of the contract or promise, it’s the customer’s turn to pay. In many cases, for example with invoices from handymen, the invoice is delivered after the service or delivery. Others would like their money upfront and deliver after the payment has been received.

What should an invoice contain?

There are strict regulations on what an invoice needs to contain. The details are supposed to help customers understand why they are being charged the total amount stated. On top, it has all the necessary information to show HMRC how a business has operated within a certain tax period. In accounting it’s mandatory to keep documentation of generated revenue. Every income and expense must be well documented. A well-written invoice is especially important with larger deliveries or complex services because it helps accountants understand what kind of transaction has taken place. Businesses are legally required to issue an invoice for their clients, but they need to store an invoice copy for their own books too. 

Good to know: In the UK, invoices are only mandatory if the two parties involved are both registered for VAT. However, it is common practice for businesses to issue invoices for all business-to-business sales to avoid problems later on. Private individuals who need an invoice for tax-related matters can simply ask for an invoice to be sent to them.

Therefore, an invoice should contain the following information to be a valid document that people can also claim against taxes later on:

  • A unique invoice number
  • The seller’s VAT number
  • Invoice date
  • The seller’s business name, contact information, and logo if available
  • The customer’s name and contact details
  • Details on purchased goods and services
  • Price and quantity for each item on the list
  • The total amount including taxes and fees
  • A date when payment is due, additional payment terms that might occur, and acceptable forms of payment

A special form is the paid invoice. It states that the amount has already been paid in full by the client or customer and is therefore considered settled. In order to function as a receipt as well, it needs to contain information on the date of payment. Invoices do not necessarily have to be created on a computer. They can also be written by hand.

What is a receipt?

What is a receipt?

So, we’ve learned about the invoice definition, now let’s dive into receipts: Unlike an invoice asking for money, receipts are actual proof of payment. They show that a financial transaction has taken place between two parties.

A receipt looks like a simpler version of an invoice. This means that less information is needed, but it focuses on the crucial details of a transaction. It is usually handed to the customer upon completion of payment.

What should a receipt contain?

Many brick-and-mortar businesses print a receipt of payment directly to hand to customers. In e-commerce, it’s common to send the receipt via email or provide an additional download function on the platform where the purchase has been made. A sales invoice, on the other hand, is sometimes only sent via request if the customer or client states that it’s needed for documentation.

While there are few formal requirements, it is essential to add the following points to the receipt to give a full picture of the transaction that was made:

  • Business name, contact information, and logo if available
  • Date of sale or service
  • Specific details on the sold goods or services
  • If applicable: invoice number
  • Price of each product or service
  • The total amount including tax and possible fees
  • If applicable: used coupons and price reductions

As a result, it becomes clear that a unique receipt number or detailed customer information is not relevant when issuing a receipt. However, for some customers wanting to exchange or return purchased products, it might be useful to add the chosen payment method. On top of this, many businesses opt to add their return policy or specific terms of sale to provide useful details and improve customer satisfaction.

Working with Moss: invoice management and accounting made easy

Working with Moss: Invoice management and accounting made easy

Documenting every transaction might seem like a chore to both small business owners and entrepreneurs working on a larger scale. Missing records of purchases, exchanges, or returns can lead to significant accounting problems, cause performance discrepancies, and cost companies money. It’s also important to show your trustworthiness to customers who expect a comprehensive receipt or invoice. This means that your receipts and invoices should contain all the information that customers may require for their personal financial records.

Moss supports small to medium-sized businesses and freelancers put paperwork to rest. Receipts and invoices can be digitised via app or web application which significantly reduces errors happening with manual documentation. This means no more worrying about damaged, lost or stolen receipts, because they’re always available when you need them.

Receipt vs invoice: keep track of both

Choosing the correct form for a transaction document is crucial for keeping your company’s books in order. Every business owner should have an eye for details to avoid issues with HMRC during the self-assessment tax return and possible checks, questions, and audits. 

With Moss, the invoice process from receiving a document to its conclusion becomes much easier and well organised.
Our transparent, digital invoice management system visualises every step, from payment requests to management approval and final payment. By having access to financial status in real-time, every business can make bookkeeping and associated administration as easy as possible. Combined with the use of flexible corporate cards, it’s possible to pay for all expenses virtually and physically—even when on the go. Proof of payment for nearly everything you need to pay will show up in your books hassle-free. And you can export all the numbers straight to Xero via a smart interface.

Master Invoice Management
with Moss


What’s an invoice?

An invoice is a demand from the seller to be paid for goods or services. Unless it states that the price has been paid in advance, it is not valid proof of payment. Sellers are legally required to issue a correct invoice with all necessary information on the purchased goods and services.

What’s a receipt?

Whenever you buy something, you get a receipt that states how much you have paid for the item. This is important when you want to claim the amount against taxes or would like the opportunity to exchange or return items.

Why is it important to differentiate between invoice and receipt?

The difference between an invoice and a receipt is that invoices ask for payment, while receipts show that a payment has already been made. However, there are also paid payments which indicate that money has been transferred. These are common for prepaid services and can act as proof of payment.

Which information should an invoice contain?

Invoices need a unique invoice number, the seller’s VAT number and business information, an invoice date, the customer’s name and contact details, a list of the purchased goods and services with individual prices, the total amount including taxes, and information on when the payment is due.

Which information should a receipt contain?

A receipt must contain the seller’s name or business, its contact information, the date of sale, details on the sold goods or services, the price of each item on the list, the total amount including tax, and possible discounts.

Should businesses keep both invoices and receipts?

An invoice is not automatically considered proof of transaction, but a receipt can function as such. Unless the invoice states that the total amount has been paid in full, we recommend adding the receipt to the documentation if it was handed out to the company.

Henry Bewicke
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    Our digital content is for information purposes only and does not constitute legal or tax advice. All content is compiled with the utmost care. However, they do not replace binding advice and are not guaranteed to be correct or complete. We do not assume any liability. For individual advice, please consult a lawyer or tax advisor.