Running a business can be exciting, challenging, and a great way to make your mark on the world! However, paperwork is part and parcel to that – and you’ll need to know that invoices are a document showing a customer what they owe and how to pay. A receipt is a document that acknowledges a payment received against that invoice.
Documentation is key to making sure you run a business efficiently, and it’s also vital to ensure your accounts are up to date and customers are satisfied with the service they receive!
Here we’ll explain in more detail how to differentiate between an invoice vs receipt slips – and which you’ll need for your company.
Do I Need to Issue Invoices and Receipts?
There are countless ways to keep track of payments made and owed, and it’s up to you how you manage that process.
- Invoices are essential to make sure clients know how much they owe you, what those charges are for, what bank account to send the cash to, and when the payment needs to be made. It’s important to create an invoice with all of the important information.
- Some businesses choose to issue remittance advice notes or remittance statements to show you that they’ve made a payment to you.
- Receipts confirm that a payment has been safely received and can be sent out as verification that an invoice balance has been settled.
- Account statements are helpful if you send multiple invoices to the same customer. A statement ticks off those invoices that have been paid and confirms the amount still owed.
Now, you might decide you don’t need to issue receipts – but they are nearly always preferable if you are paid in cash.
While a bank statement will show a wire transfer or electronic payment in both accounting records, a cash payment won’t, so it’s best to produce a receipt so you can check back and confirm what you have received.
What is a Settled Invoice – and can it Act as a Receipt?
When an invoice has been paid in full, some businesses refer to it as a ‘paid invoice’ or ‘settled invoice.’
If you don’t have the ability to raise digital receipts or don’t produce receipts for cash payments, one time-saving option is to send out a settled invoice as a courteous acknowledgment of a customer remittance.
Using an invoice template software can be a great way to keep on top of this task. You reconcile your bank statement to mark off all the invoices that have been paid, and the document will show that it has been settled.
Some companies then choose to email a copy of that invoice to their customer.
It might seem like an extra step in the paperwork chain. Still, it’s vital never to underestimate how politeness and a quick message of thanks for a prompt remittance can make a world of difference in the customer experience!
Alternatively, you could use your invoice template program to raise a receipt, which will make sure all the paperwork you produce contains all the relevant information along with professional company branding.