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what is an invoice what is a receipt how are they different and what do you put on them welcome to bullseye money the channel that helps business owners like you understand finance and today we're going to learn about the difference between invoices and receipts when you're new to business invoices and receipts may seem like the same thing because they both relate to payments but there is a critical difference and it all has to do with the purpose of each document so let's take a look at an example let's say you're a plumber you have just finished fixing a pipe in a customer's bathroom now you want to get paid this is when you give your customer an invoice for the work you have just done so the purpose of an invoice is to seek payment from your customer an invoice may look something like this and will include details such as the invoice date the due date for payment the invoice number the name and details of the supplier in this case mike's plumbing services details of how the customer can pay for the invoice details of all materials labor and other costs such as travel time that the customer is being charged the total amount the customer must pay and the suppliers contact details in case the customer has any queries also depending on the location of the business other details may be required on the invoice such as business registration numbers and local taxes such as gst or vat for example in australia invoices must also contain an australian business number or abn and any goods or services tax that may apply when the customer pays the invoice you have the option of sending them a receipt the receipt provides the customer with proof of payment and it should include some of the details found on the invoice such as the total amount paid local taxes such as gst and the date paid so from that example you can see the key difference between invoices and receipts an invoice seeks payment and a receipt is proof of payment okay so that was an example of a transaction that has an invoice and a receipt but there are plenty of transactions that have a receipt but no invoice an invoice is not needed for transactions in which the goods or services were paid for upfront in these transactions the buyer will receive a receipt from the seller but no invoice will be necessary you have probably been the buyer for lots of transactions like these examples include buying food at your grocery store shopping online for clothes and getting a haircut in each of these examples you pay for the goods or services up front so there is no need for the seller to give you an invoice and one more thing about the importance of invoices and receipts as a business you should hold on to your documents for tax purposes you may need them when filing your tax returns and in case of a tax audit so there you have it now you know the difference between invoices and receipts an invoice seeks payment and a receipt is proof of payment you