It’s a simple question that trips up many business owners: what’s the difference between an invoice and a receipt? On the surface, they might seem like the same thing — both are pieces of paper (or PDFs) tied to money. But in bookkeeping, they serve very different purposes.

What Is an Invoice?

An invoice is a request for payment.

• It’s issued before money changes hands.
• It lists what you provided (services, goods, hours worked).
• It tells your customer how much they owe and when it’s due.

Think of an invoice as your official “I’m billing you” document.

What Is a Receipt?

A receipt is proof of payment.

• It’s issued after money changes hands.
• It confirms the amount paid, the date, and often the method (credit card, e-transfer, etc.).
• It’s what your customer keeps for their own records.

Think of a receipt as your official “You paid me” document.

Why the Difference Matters for Bookkeeping

• For your records: An invoice belongs in your accounts receivable until it’s paid. A receipt shows the transaction is complete.
• For your clients: Many need receipts for expense claims or tax deductions. Sending an invoice alone isn’t enough.
• For the CRA: If you’re ever audited, you need to clearly show what was billed (invoice) and what was received (receipt).

Common Mistakes

• Treating invoices and receipts as interchangeable.
• Forgetting to issue receipts at all.
• Relying only on bank statements to track sales (not detailed enough for tax purposes).

The Bottom Line

Invoices and receipts go hand in hand — one requests the money, the other proves it was paid. Keeping both organized protects you, your clients, and your business.

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