What is the difference between an invoice and a receipt?

An invoice asks for money that is owed. A receipt confirms money that has already been handed over. An invoice creates a debt in your books; a receipt records that the debt is settled.

Does a receipt need a number?

Not legally in most places, but number them anyway. It is the only practical way to find one again when a customer asks about a payment from four months ago.

Do I have to give a receipt if the customer does not ask?

Requirements differ by country and by how the payment was taken, so check what applies where you trade. As a matter of practice it is worth issuing one anyway: it is the only thing that proves the payment was made, and it is you who will be asked to prove it if the customer forgets.

Can one receipt cover several invoices?

Yes, and it often should when a customer settles a statement rather than a single invoice. List which invoices the payment covers and how much went against each, otherwise neither side can reconcile it later.

What if I have to refund it?

Record the refund as its own document against the original sale rather than destroying or amending the receipt. Both events are real and your records should show both.

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What a receipt proves that an invoice cannot

An invoice says money is owed. A receipt says money arrived. They are opposite ends of the same transaction and one is not a substitute for the other.

That is why a customer who has already paid still asks for one. Their bookkeeping needs evidence the debt was settled, and a paid invoice with no acknowledgement is just an invoice.

For anything settled on the spot, over a counter or on a doorstep, the receipt may be the only document that ever exists. It has to stand alone.

What belongs on it

The date the payment was made, which is not always the date the invoice was raised.

The amount actually received, in the currency it was received in.

How it was paid: cash, card, bank transfer, or a reference the payer will recognise on their statement.

What it was for, in enough detail to match against something.

Which invoice it settles, if there was one. A receipt number of its own makes it findable months later.

Deposits, part payments and refunds

A receipt for a deposit should say it is a deposit and what the remaining balance is. Otherwise you have handed the customer a document that looks like settlement in full.

For a part payment, show the amount received and the amount still outstanding on the same page. It prevents the conversation where both sides remember a different number.

A refund is its own event and deserves its own document rather than a note scribbled on the original. Record what was returned and against which sale.

Keeping them, and why

Most countries require businesses to keep records of sales and payments for a number of years, though how many varies and it is worth checking the rule where you trade.

For the payer, a receipt is often what makes an expense claimable. That is a good reason to make yours legible and complete even when nobody is watching.

A worked receipt

Harbourline Ltd has paid the invoice above, and wants it acknowledged.

Receipt 0087, dated 17 March, the day the money arrived.
Received from Harbourline Ltd: 7,200.00 by bank transfer.
For: invoice 1042.
Balance remaining: nil.

The receipt date is the day the payment landed, which is not the day the invoice was raised. Those are different facts and both matter.

Naming invoice 1042 is what lets either side reconcile this months later without a phone call.

Saying the balance is nil closes the transaction explicitly. A receipt that only shows an amount leaves open whether it was the whole of it.

How to make a receipt

Enter who paid and who was paid.
Record the amount, the date and how it was paid.
Note what the payment was for.
Download the PDF.

Questions about receipts

What is the difference between an invoice and a receipt?: An invoice asks for money that is owed. A receipt confirms money that has already been handed over. An invoice creates a debt in your books; a receipt records that the debt is settled.
Does a receipt need a number?: Not legally in most places, but number them anyway. It is the only practical way to find one again when a customer asks about a payment from four months ago.
Do I have to give a receipt if the customer does not ask?: Requirements differ by country and by how the payment was taken, so check what applies where you trade. As a matter of practice it is worth issuing one anyway: it is the only thing that proves the payment was made, and it is you who will be asked to prove it if the customer forgets.
Can one receipt cover several invoices?: Yes, and it often should when a customer settles a statement rather than a single invoice. List which invoices the payment covers and how much went against each, otherwise neither side can reconcile it later.
What if I have to refund it?: Record the refund as its own document against the original sale rather than destroying or amending the receipt. Both events are real and your records should show both.