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Invoice vs receipt: what's the difference?

The short answer: an invoice asks for money, a receipt confirms the money arrived. They sit at opposite ends of the same transaction, and mixing them up is how people end up chasing payments that were already made.

What an invoice is

An invoice is a request for payment. You issue it after you've done the work or delivered the goods, and it creates a record that a specific sum is owed to you by a specific party, by a specific date.

Three things follow from that:

• It comes before payment. If it comes after, it's a receipt.
• It is evidence of a debt, which is why it matters if you ever need to chase payment formally.
• It needs a unique number and a due date, because it's a live obligation someone has to act on.

What a receipt is

A receipt is an acknowledgement that payment has been made. It's issued after the money changes hands, and its job is to prove the transaction completed. It is the customer's document more than yours — they need it for their records, their expenses claim, or their own tax return.

A receipt doesn't need a due date, because nothing is due. It should say what was paid, when, and how.

Side by side

When you send each

Invoice first, receipt after is the normal freelance pattern: you finish a piece of work, you invoice, they pay within your terms, and you confirm receipt of the money. For many freelancers that confirmation is just a short email — "payment received, thank you" — rather than a formal document, and that's usually enough between businesses.

Where payment is taken immediately — a workshop ticket, a product sale, a deposit on the spot — there's often no gap between the two, and a single document marked Paid with the date and method does both jobs.

The other documents people confuse with these

Quote

A price you're offering to do the work for, given before anything is agreed. A quote that's accepted usually forms part of the contract, so be specific about what's included and how long the price holds.

Estimate

Like a quote, but explicitly approximate. Useful when the scope genuinely isn't knowable up front. Say clearly that it's an estimate — clients tend to remember estimates as quotes.

Proforma invoice

A document that looks like an invoice but is issued before the sale is completed, usually to request payment in advance. It isn't a demand for payment of a debt and it isn't a VAT invoice, so it shouldn't be entered in the accounts as one. Once the money is in, you issue the real invoice.

Credit note

Cancels or reduces an invoice you've already issued — an overcharge, a return, cancelled work. Always use a credit note rather than deleting or reissuing the original: the audit trail is the point.

Statement of account

A summary of everything outstanding between you and one client over a period. Not a demand for payment in itself — it's a reminder of which invoices are still open. Handy with clients who have several invoices running at once.

Keeping both

Keep copies of the invoices you issue and the receipts you're given for things you buy. The invoices evidence your income; the receipts evidence your expenses, and unevidenced expenses are the ones that cause problems if HMRC ever asks. Bank statements alone show that money moved, not what it was for.

Sole traders are generally expected to keep records for at least five years after the 31 January submission deadline for the relevant tax year; limited companies for at least six years. Confirm the current requirement for your circumstances on GOV.UK.