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<h2>What you’ll learn</h2>


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<li>How to define an invoice, bill, and receipt</li>
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</ul>


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<li>The difference between these payment documents</li>
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</ul>


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<li>When to use each of these to make your payments process smoother</li>
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</ul>



Invoices, bills, and receipts all have distinct functions in any business transaction. Understanding the difference between each of these documents can help you stay organized and get paid faster.


The main difference between invoices and bills hinges on who originates the document and the point at which the document is generated and shared during a transaction. Receipts are issued to document the completion of a transaction.


<h2>What is an invoice?</h2>


An invoice is a financial document sent to customers when goods and/or services get provided. The invoice may request immediate payment or establish a future due date.


<a href="https://gohopscotch.com/blog/a-small-business-owners-guide-to-invoicing/">Standard invoices</a> typically include the following information:


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<li>Details on the item(s) sold or services rendered</li>
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</ul>


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<li>Amount owed</li>
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</ul>


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<li>Payment terms</li>
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</ul>


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<li>Due date</li>
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</ul>


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<li>Contact information</li>
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</ul>



Invoices need to be tracked with a filing system to properly manage <a href="https://gohopscotch.com/blog/accounts-payable-vs-accounts-receivable/">accounts receivable</a> and ensure that payments get made on time. By dating and numbering your invoices, you’ll have a record of how much money is owed and when to expect it.


<h2>What is a bill?</h2>


You receive a bill when you owe money to an individual or organization. A list of your bills represents your accounts payable. If you don’t keep track of these expenses, you could seriously impact your cash flow.


Most bills include:


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<li>Details on what was purchased</li>
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</ul>


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<li>Amount owed</li>
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</ul>


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<li>Payment options</li>
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</ul>


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<li>Due date</li>
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</ul>



Paying bills on time is important to avoid late fees and other penalties.


<h2>What is a receipt?</h2>


Receipts are given to clients when payment is received and the transaction is complete. Receipts are vital for business owners and customers as they help track purchases. It’s easier to track expenses if you catalog receipts.


Information you might see on a receipt includes:


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<li>Transaction date</li>
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</ul>


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<li>Amount paid</li>
</ul>
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</ul>


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<li style="list-style-type: none;">
<ul>
<li>Payment type</li>
</ul>
</li>
</ul>



<h2>Comparing invoices, bills, and receipts</h2>


Invoices, bills, and receipts serve different purposes and have different processes. Invoices get sent before they’re due, bills are paid on time, and receipts are issued for every purchase.


Here’s a further breakdown of the differences between these standard documents.


<h3>Invoice vs receipt </h3>


An invoice gets sent before payment is received, while a receipt gets issued after payment is received.


Almost every transaction that requires an invoice also needs a receipt. However, the reverse isn&#8217;t true. If the transaction is settled immediately, like inside a storefront, a receipt alone will suffice.


As a business owner, you will both give and receive receipts.


<h3>Invoice vs. bill</h3>


Businesses send invoices and receive bills. The bills represent money owed to sellers, like vendors. Invoices are used to track accounts receivable, and bills are used to track accounts payable.


If a buyer receives goods or services and does not pay at the moment of sale, it’s appropriate for the seller to send an invoice. When that invoice reaches its destination, it becomes the customer’s bill.


<h3>Bill vs. receipt</h3>


A bill notifies you that payments are due. Receipts get provided when that payment has been finalized. Bills usually provide instructions on how to pay, and receipts provide proof of payment.


Bills and receipts are typically linked. Customers expect to receive a receipt after their bill gets paid.


<h2>When should I use an invoice, bill, or receipt?</h2>


Invoices, bills, and receipts are documents that your business will handle frequently. They&#8217;re each suitable for specific situations.


<h3>Invoice</h3>


Invoices are sent to customers and usually contain itemized purchase details, payment terms, due dates, and contact information. Invoices should be issued when goods or services require future payments.


<h3>Bill</h3>


When your business makes a purchase, you&#8217;ll receive a bill if you don&#8217;t pay upfront.


There&#8217;s never a situation where you need to issue a bill. The bills that your customers pay are your invoices.


<h3>Receipts</h3>


Receipts should be given to customers and vendors when payments get made. Receipts provide proof of payment as well as details about the transaction.


Receipts are necessary for every transaction unless the customer declines.


<h2>Use Hopscotch to automate invoicing and bill pay</h2>


Invoices, bills, and receipts are essential for monitoring the money that flows in and out of your business. Ensure you use the right document for each transaction to help streamline operations and maintain accurate payment records.


Learn how Hopscotch can <a href="https://gohopscotch.com/">make accepting &amp; sending payments easier</a> for your business, and <a href="https://app.gohopscotch.com/register">sign up</a> today to experience instant, fee-free payments.

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