An invoice and a receipt describe the same transaction from opposite sides of the moment money moves. The invoice comes first and asks to be paid. The receipt comes after and confirms that it was. They are not two words for the same document, and treating them as interchangeable causes real problems — for your customer’s expense claim, for your own books, and occasionally for both parties in an audit.
The confusion is understandable, because a paid invoice and a receipt carry much of the same information. The difference is not what they contain but what they assert.
What each document asserts
An invoice asserts a debt. It says: this work was done or these goods were supplied, this amount is owed, and here is when it is due. Until it is paid it represents money you are owed — an account receivable in your books and an account payable in your customer’s.
A receipt asserts settlement. It says: this amount was paid, on this date, by this method. It creates no obligation and carries no due date, because the obligation it refers to has already been discharged.
Everything else follows from that distinction. An invoice needs payment terms; a receipt does not. An invoice needs a due date; a receipt needs a payment date. An invoice can be chased; a receipt can only be reissued.
| Invoice | Receipt | |
|---|---|---|
| Issued | Before payment | After payment |
| Asserts | This is owed | This was paid |
| Carries a due date | Yes | No — it carries a payment date |
| Shows payment method | Not usually | Yes |
| In your books | Creates a receivable | Clears a receivable |
| Customer uses it to | Approve and schedule payment | Claim an expense or prove purchase |
Why "paid" stamped on an invoice is not quite a receipt
Marking an invoice as paid is common practice and often accepted, particularly between businesses that trust each other. It is still weaker than a receipt, for a reason worth understanding: a paid-stamped invoice records that a debt existed and asserts informally that it was settled, but it does not carry the details that make settlement verifiable.
A proper receipt states the date payment was actually received, the amount received — which may differ from the invoice total if there was a partial payment, a discount or a deduction — and the method. Those three facts are what let a bookkeeper reconcile the payment against a bank line, and what let an auditor confirm the transaction from both directions.
The practical test: if your customer paid £950 against a £1,000 invoice with £50 withheld pending a fix, a paid stamp on the £1,000 invoice is actively misleading. A receipt for £950 on a stated date is accurate. Most of the time the informal version is fine; it fails exactly when the transaction was not clean, which is exactly when documentation matters.
When you must issue one
The obligation to issue a receipt is national and depends heavily on who you are selling to. Consumer-facing transactions are the most regulated: many jurisdictions require a receipt or till record for retail sales, sometimes with specific content or a registered till system. Business-to-business sales are more often governed by invoice rules, with receipts treated as a matter of practice rather than law.
Beyond any legal duty there is a commercial one. Your customer may simply need it — to claim an expense, to support a warranty claim, to satisfy their own bookkeeping, or because their internal process requires proof of payment before they will close a purchase order. Refusing or forgetting to send one creates friction out of all proportion to the effort of sending it.
A reasonable default: issue a receipt automatically for consumer sales and for any business payment made by card or cash, and on request for everything else. Payments by bank transfer often need no receipt because the bank record already proves settlement — but send one if asked, and never treat the request as unusual.
What belongs on a receipt
A receipt should let someone who was not there reconstruct the payment. That means your business name and contact details, a unique receipt number, the date payment was received, what it was for — a description or a reference to the invoice it settles — the amount received, the payment method, and where tax applies, the tax treatment.
Two fields are commonly omitted and commonly missed. Referencing the invoice number ties the receipt to the debt it cleared, which is what makes reconciliation trivial rather than detective work. And where a payment is partial, stating the remaining balance turns the receipt into a running record instead of an isolated fact.
Common Mistakes
Sending an invoice after payment and calling it a receipt
A document headed "Invoice" asserts a debt. Sending one after payment invites duplicate payment, and in the customer’s system it may well create a second payable.
Reusing the invoice number as the receipt number
They are separate sequences documenting separate events. Sharing numbers makes reconciliation ambiguous and, where invoice numbering is regulated, muddies a sequence auditors expect to be clean.
Omitting the payment method
Method is what ties the receipt to a bank line or card settlement. Without it, a receipt confirms an amount but not which of several payments it refers to.
Treating receipts as optional record-keeping
Receipts you *hold* for purchases are the evidence behind your own deductions. Retention rules apply to them exactly as they apply to invoices, and a shoebox of faded thermal paper is a genuine audit risk.
Frequently Asked Questions
Can I use an invoice as a receipt?
Informally, and often it is accepted — marking it paid with the date and method received gets most of the way there. It falls short when the payment was partial, discounted or otherwise did not match the invoice total, because the invoice states the wrong amount for what actually happened.
Do I need to give a receipt if the client paid by bank transfer?
Usually not, since the bank record already evidences the payment for both sides. Send one if the client asks — many finance processes require proof of payment on file regardless of how obvious the transfer is.
How long should I keep receipts?
For the same period as your other business records, which is national and commonly in the range of several years to a decade. Receipts for purchases matter most, since they support the deductions you have claimed.
Is a card terminal slip a valid receipt?
It evidences the payment but often lacks what a full receipt needs — a description of what was bought, and tax detail. For anything a customer may claim as an expense, issue a proper receipt alongside it.
Sources & Further Reading
- Recordkeeping for businesses — Internal Revenue Service
- Invoicing and taking payment from customers — GOV.UK
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