Invoice vs receipt - differences and when to use each

• Cash flow challenge: I often get confused between invoices and receipts, and I’m not sure when I should issue one or the other to customers.

• Perfect for: Business owners and finance teams who want to keep accounts clear and avoid misunderstandings with clients.

Novuna helps businesses streamline invoicing and payment processes while providing funding to bridge cash flow gaps when payments are delayed.

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What is an invoice?

An invoice is a formal request for payment issued by a business to its customer. It typically includes:

• Supplier and customer details

• Invoice date and payment due date

• A list of goods or services provided

• The total amount owed and any VAT details

• Payment instructions and reference numbers

Invoices are usually issued before payment is made. They form part of your sales records and must be kept for accounting and tax purposes.

What is a receipt?

A receipt is proof that a payment has been made. It is issued after the customer pays the invoice or makes a purchase. A receipt usually includes:

• Business and customer details

• Date of payment

• Amount paid

• Payment method (bank transfer, card, cash etc.)

• Confirmation that the balance is cleared

Receipts are important for record-keeping, customer reassurance, and in some cases for expense claims or warranties.

Key differences between invoices and receipts

• Timing: Invoices come before payment, receipts come after.

• Purpose: Invoices request money, receipts confirm money has been paid.

• Legal status: Invoices are essential accounting records, while receipts serve as proof of payment.

• Cash flow impact: Invoices help track what is owed, receipts confirm what has been received.

When to use an invoice vs a receipt

To keep payments on time and avoid issues:

• Use an invoice: When you sell goods or services and need to request payment.
• Use a receipt: When payment has been made and the customer needs confirmation.

Most businesses will issue both. The invoice starts the process, while the receipt closes it.

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Best practice for small businesses

• Always issue invoices promptly to reduce payment delays.

• Use clear payment terms so customers know when and how to pay.

• Provide receipts quickly to confirm payments and strengthen customer trust.

• Store both invoices and receipts securely for accurate accounts and smooth cash flow management

Managing cash flow when payments are delayed

If invoices are not paid on time, it can strain your cash flow. Novuna helps businesses unlock funds tied up in unpaid invoices with solutions such as invoice finance or short-term funding. This ensures you can continue issuing receipts to paying customers while waiting for others to settle.

How Novuna Business Cash Flow can help

We work with UK businesses to make invoicing and payments stress-free. From credit control support to funding solutions, our goal is to keep your cash flow moving and your records accurate.