In this article, we are going to explore
- What is invoice, receipt, bill, quote, and estimate?
- The difference between invoice vs bill vs receipt.
- The difference between estimate vs quote.
What is an Invoice?
An Invoice is a document, sent to the client that includes the product or the service provided by the business (i.e., seller) by including the total amount owing for the work. An issued invoice list will describe the seller’s product or services, the deadline to pay the bill by the client.
What are the functions of an invoice?
- An invoice is processed before payment to request the payment from the client by including the specific deadline.
- It requests payment from the client for the contributed product or service by the seller.
- An invoice act as a record-keeping, by maintaining the products or service sold by a seller.
What is included in an invoice document?
Based on the transaction the invoice documentation includes the seller’s unique identification number, terms of payment, invoice date, describes the product or services provided by the seller, and the total amount or due amount.
What does a formal invoice contain?
- Include seller’s name, address, company registration number, and contact details.
- Add buyer’s name and address to it.
- Mention the date of invoice issued, payment due date, and delivery date.
- Your unique identification invoice number.
- A line-by-line offered product or services including the quantity, cost per product or service, and the total cost.
- Add the charged total amount by including the tax information.
- Provide your bank account details, and don’t fail to add the payment methods.
- Adding the identification reference code for the customer will help you more and will make the invoice unique from another invoice.
If you feel the process of issuing the invoice is too long and difficult, then you can go for invoice software.
What is Bill?
Similar to an invoice, a bill is also a type of document to summarize the amount owes for the provided products or service, by including the statement of charges.
What are the functions of the bill?
- Before sending a payment, a bill must be processed and issued.
- A bill stores the record of provided product or services for your client by a business, and it is the act of payment owing remainder.
- Before entering the bill in your book as paid, a client must receive an invoice from the seller.
- In simple words, a bill means you are required to pay for the product or services provided by the seller, and an invoice seller is requesting money for the product or services provided by them.
- Thus, the term invoice and is described from the product or service provider end and the bill is used by the client who receives them as an invoice.
What is a receipt?
A receipt denotes the proof of the payment. The payment receipt will be offered by a product or service provider. This receipt will include the product or service provider’s details, issued date, the total amount paid, method of payments, and remaining due amount in case of any balance left.
Keep in mind that the payment receipt can be processed and issued for either the total payment amount or the partial payment amount. At any time, if the transaction of the amount takes place, the payment receipt should be issued.
What is a Quote?
A quote must be listed before you start any of the products or services. The product or service provider will tent to prepare the quote. The quote will list you an accurate estimation of how much the product or services costs. The quote is processed and issued after the representative of the seller consults with the client’s needs. Most often the valid days of quotes are 30 days from the issued time. Also, a quote can be readjusted based on the requirement of the client.
What does a formal quote contain?
- A quote may include the company logo and contact info or may contain the company branding printed on a letterhead.
- Include a professional greeting by thanking the customer.
- Mention all the client-required needs without missing them. It is more preferred to cross-check twice or thrice once completed.
- If required, you can also add the additional relevant requirement based on the client’s need.
What is an estimate?
An estimate is a type of proposal given by a seller. The document contains the report outlining of what are the products or services costs for the client. An estimate is done, and the estimate document is shared by determining the costs for the client approximately but not accurately.
Keep in mind, estimation is done before offering an invoice and receipt. An estimate is just the outline for the products or services offered by the seller.
What does an estimate document provide?
- The seller will estimate the outline product or services to be done for the client.
- The approximate estimation amount for the offering products or services.
- Other terms and conditions for the offering products or services.
- Required time limits and completion date for the offering products or services.
What’s the difference between an Estimate and a Quote?
Do the words estimate and a quote means to be the same? Are you running a small business? Have you ever exchanged the term quote and estimate? As a business person, you should have a clear perspective for both the terms estimate and a quote. Here we explore the difference between estimate and quote!
Estimate in a very easy term it can be described as just a guess! An estimate is not accurate, whereas it is an approximate price prediction that may vary in the future. When it comes to a quote, it is more accurate. A quote is a line-by-line product or service offered by a seller with the exact payment amount by including the payment terms.
For both estimate and quote, there is a requirement to know about your fixed and variable costs. The fixed and variable costs include manual costs per hour and the required material cost.
Tip: If required for your quotes and estimates, you can also set an expiry date, which will no longer exist or be valid.
What’s the Difference Between an Invoice and a Bill?
The two terms Invoice and Bill are the common words that are thrown by your accountants, businesses, and customers alike, and it’s more familiar to be interchanged. Though Invoices and bills do have some common things in them, they are different from each other. The Terms invoice and bill are sometimes mean to be trickier, to understand the difference between both the documents and, when to use those documents. Even a small misunderstanding may affect your financial management and can lead to a major disaster.
One of the great examples of the importance of words and communication can be invoices and bills. An invoice and a bill try to convey similar information based on the product or services provided by the seller as a part of a business transaction, but an invoice will be generated by the seller who provides the product or services, on the other hand, the client will receive an invoice as a bill to be paid.
Here is an example of the difference between an invoice and a bill, which are used in accounting differently.
- A buyer chooses the product or service they required from the seller.
- A seller sends an invoice for the mentioned product or service to the client.
- The client receives an invoice as a bill.
- The client pays the owing amount.
- The seller as proof of received payment issues a receipt to the client.
What’s the difference between an invoice and a receipt?
An invoice can never be a receipt. The terms Invoice and bill may look similar to each other but aren’t identical. Both an invoice and receipt are words related to the payment. But in the perspective of businesses, they are different from each other. As a business owner, there is a need to have a clear perspective on both the terms of invoice and a receipt. Before exploring the difference between the invoice and receipt, let’s take a look at the definition of an invoice and a receipt.
From the above invoice and receipt explanation itself, you can understand that both are not similar. Here follows the most important dissimilarities between an invoice and a receipt. An invoice is issued for payment made, and a receipt is as proof of payment done.
The main key difference between an invoice and receipt is that invoices are provided as the request for the payment, whereas a receipt is issued as proof of payment done. An invoice gives the clear-cut total due amount and payment deadline for the client, in case of receipt, it gives the information about the total amount paid, including the payment method.
Thus, both an invoice and receipt come under the payment process with different uses and different documents.
What’s the difference between invoices and quotes?
Most people get confused about the difference between an invoice and a quote. An invoice and a quote are different documents. Both the documents are proof that you have paid on time and accurately.
Before you start any of the client’s work, there is a need and requirement to prepare a price quote based on the client’s product or service’s needs. The seller or a business owner will prepare and provide an invoice about when the work gets completed by including their complete task. This document contains the payment amount for the given products or services.
Issuing the price quote and invoice is a best practice for professional business owners. Providing price quotes and invoice will not only maintain the cash flow, but also it helps to generate new clients from referrals. Even though both the quotes and invoice look identical, they differ in their roles. Therefore, it is more important to analyze when each of them should be processed and issued.
Invoice Vs Receipt Vs Bill: Their Differences
Have you used the terms invoice, receipt, and bill? As a small business owner or as a freelancer, you might have heard the terms invoice, receipt, and bill more often. But sometimes, you have mismatched these terms, instead of using the exact term. Though invoices, receipts, and bills are involved in the payment process, they are not similar to one another. Invoice, receipts, and bills are some of the accounting documents used in your regular business routine. In this article, you will understand the key points and major differences between invoice, receipt, and bill.
The major differences between an invoice and the receipt depend on when these are issued. An invoice is issued to prior receiving payment. The receipt is issued after the payment process is done from the client’s end. A bill is just a specific term used from the client’s end to denote that they have received the invoice document.
Example of Invoice Vs Receipt Vs Bill
Think of yourself as a small business owner or a freelancer!
- Your client is requesting a cleaning service. You prepared an invoice with the outline details by including the payment terms, the services you offer, and more. For every business, the payment terms may vary based on the seller’s product or services.
- You created an invoice and issued it physically or electrically.
- The invoice will be received by the client, as a bill from the client’s end. The client will process the payment using any of the payment methods based on your payment terms.
- The next day, you receive the payment from your client. As proof of payment from the client’s end, you issue a payment receipt.