What’s the difference between a receipt and an invoice?

On the surface receipts and invoices sound like similar documents. Both provide a record of the items or services purchased with a breakdown of prices and taxes.

However, there are a few crucial differences between receipts and invoices which make each suitable for a different scenario.

The fundamental difference between quotes and invoices comes down to when each document is sent.

Receipts are always provided after the transaction as a record of what has been purchased and as proof of payment. Invoices, on the other hand, are given before the transaction.

Invoices act as a request for payment meaning they are sent before the customer has paid. This means an invoice isn’t suitable for proof of payment.

Are receipts legally required?

Technically receipts are not a legal requirement in the UK; however, under the UK Consumer Rights Act 2015, businesses must provide proof of purchase if requested by the customer.

Proof of purchase doesn't necessarily need to be a receipt and could be an email or paid invoice; but in most cases, it will be a receipt. This means that effectively you will need to be able to provide a form of receipt if the customer requests it.

What needs to be on a receipt?

A receipt should include:

• Your business name
• The time and date of the payment
• A breakdown of the items purchased
• Prices and quantities per item
• A total price

Receipts can be printed or written out by hand. As long as it adequately provides proof of purchase you should be covered.

What needs to be on an invoice?

The main requirements for an invoice are the following:

• Your company name, address and contact information
• The client information including their name and address
• A unique invoice number
• An invoice issue date
• A record of products and services with short descriptions
• A total price - this can be broken down into costs by part
• VAT number (not required in all cases)

You can find a more detailed breakdown of what you need to include on your invoices in our article on how to write an invoice.

Can an invoice serve as a receipt?

An invoice should not be used as a receipt. This is because an invoice works as a request for payment and does not include confirmation as to whether that payment has been made.

Once payment has been received a separate receipt should be sent or you should provide a clear indication of payment received on the invoice.

There is also nothing stopping you from converting your invoice into a receipt. To do this you need to make it clear that payment has been made and that the new document provides a record of that payment.

Do I need to issue both an invoice and a receipt?

The short answer is no, in many instances, an invoice is sufficient on its own and a receipt is not required. However, you will need to provide payment confirmation of some kind.

In most cases, payment confirmation can simply be achieved by visibly marking the invoice as paid.

Another common practice is to follow up the invoice with a simple payment confirmation email.

However, there are some instances where a receipt is necessary on top of the invoice.

In B2B transactions where detailed record keeping is needed, a receipt should be provided. A receipt with an invoice might also be required for large purchases or contracts or for online and subscription services.

Example Receipt

Here is an example receipt we have put together.

Example Invoice

Here is an example invoice we have put together.

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