Although sales receipts and invoices may appear the same in the business sector, QuickBooks makes a severe distinction between these two terms related to when and how customers need to give money for the services received. These two terms are quite confusing too.
As per Intuit, invoices enable customers to pay for the services rendered, while sales receipts monitor the payments along with the receipts at a time. Invoices also provide more flexibility in comparison to sales receipts, managing other sales-tracking operations which the sales receipts in QuickBooks are unable to process.
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In simple words, receipts and invoices are both considered documents that are generated at the time of the sale, however, they both have separate functions. In today’s article, we will talk about what receipts and invoices are and how they differ from each other.
What is an Invoice?
An Invoice is considered a document that is generated from a business to a client when it is time to pay up for the services rendered or goods supplied. It is considered an official appeal for payment. Furthermore, it works as a proof of sale for your particular business.
Now, since invoices are considered business documents, there are compulsory invoice fields that must be included in them. This comprises your customer name along with your business name, invoice number, address, payment due date, date of issue, and a proper breakdown of the services and goods solve and the amount pending.
Invoices are delivered post the services or goods have been delivered but prior to the payment has been received.
What is a Receipt?
A receipt is considered a document that is generated from a business to a particular customer after he/she has paid for the services or items provided. It works as proof of payment for your customer and business.
Payment receipts must include your business details, the payment date, the actual invoice number, the amount paid along with the balance that is left over.
Anytime when a payment is accepted from a customer, a receipt is generated. This comprises partial payments or deposits.
What is the Difference Between a Receipt and an Invoice?
Receipts and invoices have separate functions since they are generated on different levels of the sales process. Invoices are generated before the customer has sent the payment, while a receipt is generated once the payment has been acknowledged. Furthermore, the invoice is more of a request for payment, while the receipt is more of a payment proof.
This also states that every document needs different details. The invoice must comprise a comprehensive breakdown of the services and products delivered while the payment receipt only needs to display the amount paid and the particular balance that is due. Both these documents should have proper naming Receipt or Invoice.
Here is a further explanation of the difference between Sales Receipts and Invoices:
Payment Terms Recording
One of the main objectives of QuickBooks is to monitor the accounts receivables. With the help of invoices, records of those customers who owe you and do not pay in advance or pay in full can be segregated from others and can be reported. Sales receipts, however, do not offer such categorized listing.
Payment Methods Usage
Sales receipts make the process of monitoring customer sales very easy that access just one payment method. However, in the case of an invoice, it helps customers to pay via a set of methods like cash, change, check, etc.
Require Written Assumptions
When you are thinking to use an invoice vs a sales receipt, you must consider an invoice in order to process the jobs that need written purchase orders or assumptions. Furthermore, in just one click, any purchase order or estimate that you designed for a customer in QuickBooks can be converted into an invoice. Purchase orders and estimates cannot be transformed into sales receipts, and at the same time, sales receipts cannot be transformed into a particular invoice.
Invoice usage vs Sales Receipt usage
Invoice prove to be very helpful with contractors, mail order firms, and consultants. However, sales receipts usually work better in situations where demand for payment arises at the same time when services are provided.
Methods for Filing them
To track sales receipts, QuickBooks has a two-step process. You add the sale details, and the money accumulated from the sale is put into an account at the same time.
It is a three-step process for invoices. You prepare the invoice, get the payment and then do the deposit.
Which one Should You Use? Sales Receipts or Invoice
When a transaction is processed, an invoice or sales receipt is generated but not both. If you do not expect to be paid in full at once, then an invoice is best for you. Furthermore, when you make an estimate or purchase order, it can quickly be converted into an invoice.
A sales receipt is a good choice if you run a business where you will get the full payment after the product is provided or services are delivered. Regardless of whether you use sales receipts or invoices, QuickBooks can issue separate reports on the particular sales tax pending.
We have pointed out all the differences between sales receipts and invoices in QuickBooks. We hope that this article will highlight all the points related to invoices and sales receipts. As a result, you will be able to segregate between the two and use them as per your business requirement.
If you need further assistance in understanding the difference between sales receipts and invoices in QuickBooks, you can get in touch with our team of experts.
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How to Create Sales Receipts in QuickBooks?
Here are the steps to create a Sales Receipt in QuickBooks:
Step 1: Press the icon Create Sales icon on the home page. You can also click the Customer menu and choose Enter Sales Receipts.
Step 2: Press the down arrow in the given Customer:Job field.
Step 3: Choose the right one. In case you allocate transactions to Classes, choose the right one in the list. The template field must default to the right form. In case you have generated more than one Sales Receipt template, choose the one you want. Press the icon for the right payment type.
Step 4: After choosing the right item from the given drop-down list, add the Quantity.
Step 5: Make sure to apply for the Sales Tax status after you open the list.
Step 6: After completing filing the table for the goods and services sold, save the transaction. You can also print it and email it to your particular customer.
How to Create Invoices in QuickBooks?
Here are the steps to create invoices in QuickBooks:
Step 1: Press Create Invoices on the home page.
Step 2: Now enter all the information on the top side of the screen just like it was done for the sales receipt. The forms are similar.
Step 3: Invoices have Bill To and Ship To address, Make sure you fill them along with the Terms and Due Date.