Invoice vs receipt — what's the difference?

Invoices and receipts both document a sale, but they do opposite jobs at opposite ends of it. Confusing them is common and occasionally expensive — mostly when a customer tries to reclaim VAT from the wrong one.

The short answer

• An invoice is a request for payment — issued before you have been paid. It shows what is owed and when it is due.
• A receipt is proof of payment — issued after payment is made. It confirms money has changed hands.

Side by side

	Invoice	Receipt
Purpose	Requests payment	Confirms payment
Issued	Before payment	After payment
Shows	Amount due, due date	Amount paid, date paid, method
Creates a debt?	Yes	No — it closes one
Used for	Getting paid, your sales records	Proof of purchase, the buyer’s records

The usual flow

You send an invoice. The customer pays. You then either issue a receipt or — more commonly, and just as good — mark the invoice Paid with the date and method.

For your own bookkeeping, the invoice is the document that matters. It is what records the sale, what your VAT return is built from, and what an inspector will ask to see. A receipt is a courtesy to the customer and a convenience for them, not a substitute for the invoice.

What a receipt should show

If you do issue a separate receipt, include:

• Your business name and contact details
• The customer’s name
• The date payment was received and the method (bank transfer, card, cash)
• The amount paid
• What it was for, and the invoice number it settles
• Whether it clears the invoice in full or leaves a balance

That last point is the one people leave off, and it is the one that causes confusion later.

Where VAT comes in

If your customer is VAT registered and wants to reclaim the VAT, they generally need a proper VAT invoice showing your VAT number, the rate and the VAT amount — see what a VAT invoice must include. A plain receipt saying “£240 paid, thanks” supports nothing.

There is one important shortcut. For supplies of £250 or less including VAT, you can issue a simplified VAT invoice, which is frequently a receipt in practical terms. It must show:

• Your name, address and VAT registration number
• The time of supply (the tax point)
• A description of the goods or services
• The VAT rate applicable to each item
• The total payable including VAT

It does not need the customer’s details or a separate net-and-VAT breakdown, which is why till receipts can work as VAT invoices. Exempt supplies must not be included on a simplified invoice.

Not VAT registered? Then neither your invoice nor your receipt shows VAT at all — see invoicing without VAT.

Deposits and part-payments

This is where the two documents genuinely need to coexist. A customer pays a 40% deposit: they get a receipt or acknowledgement for the deposit, while the invoice remains open for the balance. Don’t mark the invoice paid, and don’t issue a new invoice for the same work — that double-counts the sale.

If you are VAT registered, remember that receiving a deposit creates a tax point, so the VAT on that payment falls due when it arrives rather than when the job finishes.

Two mistakes worth avoiding

Sending a receipt when you meant to invoice. A business customer needs a document they can enter into accounts payable and pay against. A receipt tells them money has already moved, which it hasn’t — and it gives them nothing to schedule a payment from. If they need figures before paying, send a proforma.

Numbering a receipt from your invoice sequence. Receipts are not invoices, and pulling a number from the invoice run leaves a gap in it. Keep separate series, as covered in how to number invoices.

Start with the invoice

Build a clean, professional invoice in the generator and mark it paid when the money lands — then the receipt is just confirmation of something your records already show.