Bill, Invoice, Receipt, Voucher: Let’s study and discuss the following statements and what makes them different from one another, and what purposes are they used for:
- I cleared the hotel bill when we checked out.
- One can pay the invoice by direct debit, debit card or credit card.
- Delivery of the promoted free gift with your subscription normally takes six weeks after the receipt of the payment.
- I won a gift voucher with 12 months’ validity.
Bill is represented as a statement of charges or fees, which comprises the list of items along with their prices that is implemented from the seller to the buyer concerning the products bought by the buyer.
A bill is typically more immediate than an invoice, with the sender presenting the bill right away and wanting quick payment, usually without the option of payment terms. For example, suppose an individual dines out at a restaurant. In that case, the individual\firm will receive the bill for their food before the individual leave the building, and the person is responsible for paying it immediately.
An invoice is a statement issued by the businessperson to the customer of goods sold or services rendered by the individual. It is a legal document that is non-negotiable and identifies the buyer and seller of the stuff. It contains details regarding price, quantity, taxes, discount, the total amount due for the payment, date of issue of invoice, seller’s signature, invoice number, and any added payment terms, like if the firm is giving their customer the alternative to pay one amount versus monthly payments.
The main motivator that makes people work is earning money and paying bills. If there are no bills to be paid at the end of each month, most people will gladly quit work.
As a business owner, at the beginning of every month, one might be sending out bills or might send out invoices.
But, one should know the difference between billing vs invoicing:
‘Bill’ and ‘Invoice’ are the most popular two terms that always confuse businesses, accountants and customers. However, there are many differences as well as similarities between both bills and invoices. The article mentions the difference between invoice and bill. It will help a person make their billing process smooth, and one gets paid quickly from their clients.
Major Difference between Billing and Invoicing
Although both terms after any purchase order are often used interchangeably, some key differences set bills and invoices apart from each other. On consulting authorities in the invoice finance industry, we found the following major differences between the two:
Businesses that are collecting payments from their clients use the term invoice.
The name and address of the customer are usually mentioned in invoices.
An extended credit limit is included in invoices, and after receiving the invoice for a product or service, the customer makes the complete payment within a few days.
Accountants, wholesalers, lawyers tend to send invoices to their clients.
Clients, when they are making the payment, usually refer to the invoices as bills.
- Bills are usually general in nature without any personalisation factor and just contain the amount and details.
- Bills are mostly paid immediately and upfront, with no delay on the credit limit.
- Bills are usually given at salons or restaurants.
Why Should You Use Invoicing Software for Their Business?
Create invoices instantly, from anywhere: One can create an invoice from any corner of the world with the help of automated invoice billing software. All they need is internet connectivity, and they shall be good to go. It helps the individual get rid of the physical constraint of being tied up to their desk, but they can also even share the invoices via email.
Install recurring invoices to send automatically: It is a tedious task to send the same invoices to a regular client. What if one could send out these invoices automatically by automating the whole process? All the time that will save the person.
Reduce the risk of error: One of the most significant factors is the manual entry of data that one’s process of invoice reconciliation may be struggling with daily. With the use of invoice billing software, not only the data is getting automatically populated, but it also accurately results in effort saved and more time.
A single centralised system of management: One should not keep on relying on multiple sources to search for customer details, order details, credit notes, product information, etc. No more relying on manual effort should be made to populate the same fields again and again. No more interference between bill vs invoice too! With just a single system to the house for all information, one doesn’t need to look further!
Always keep an eye on the flow of cash at a glance: By merely streamlining the process of invoice reconciliation equals more time saved and money saved with being more accurate. So, all the time saved from rectifying errors due to manual intervention can be spent on monitoring the cash flow of their business.
A receipt is a record acknowledging that a person has received property or money in a payment following a provision of a service, or sale, or other transfer of goods. All receipts must have the purchase date mentioned on them. In few parts of the world, a business must provide a receipt confirming the details of a transaction to the customer. In most cases, the receipt is provided by the recipient, but in other cases, the payer generates the receipt, as in the case of a refund and goods being returned.
In the case of transactions done business to business, the receipts for purchases of trading goods or raw materials will constitute business purchases. The receipts act as proof of purchases and petition for business expenses and filing of monthly and annual tax returns. For accounting and keeping track of the payment, transactions help vendors.
Similarly, in the process of banking, and for the purpose of cash and cheque withdrawals and deposits, a customer having a bank account will obtain a receipt. A bank account holder can also download receipts for electronic transactions, such as transfer of money, payment by debit cards or credit card.
A person making investments will also obtain receipts of deposit in the case of fixed deposits made in a bank, mutual funds investments, stock market transactions, a receipt for PPF deposits and so on. These receipts enable entry into the records and will act as evidence of the investments for the investor.
So for every customer purchase, they may rightfully demand a receipt for every service that the customer receives and pays for.
- A bill is considered a request for payment, while the statement of payment received is a receipt.
- A bill is granted when money is owed, while when an amount owing has been paid, a receipt is given.
Under the business laws of the land, generating and providing receipts to customers is mandated. The law also advises that for a specified period for the purpose of assessments or audit, one should retain the receipts. In India, it mandates the maintenance of records of receipts the Goods and Service Tax Law and Income Tax Act, from 1961.
In terms of Accounts, vouchers suggest a record for documentation transactions that serve to witness or confirm(vouch) for a transaction. Commonly, a voucher is a record that shows all the goods that have been bought or services that have been rendered, authorises payment, and registers the ledger account(s) in which transactions have to be recorded. A voucher is a bond of a transaction type that is redeemable and worth a certain monetary value that can be spent only on specific goods or for particular reasons.
A voucher is a supporting document that the company’s accounts department uses to create and file all supporting documents required to approve the voucher. Vouchers make sure that their respective payment is made in an authorised manner and helps record all transactions. The company actually and properly receives the purchased goods and services.
If vouchers are used for every payable, then the total amount of outstanding accounts payable can be determined, and the total amount of all payables can be aggregated. However, this function is only demanded in the accounting system that is run manually. The system of computerised accounting uses the aged payables report.
But commonly by vouchers, we mean the following kind:
- Gift vouchers: can be exchanged for services or goods up to their face value. When buying a gift voucher, check all the terms and conditions, including the date of expiry. Try to buy vouchers that can be used at more than one chain or outlet and make use of vouchers as instantly as possible.
- Discount voucher: A discount voucher is a kind of financial incentive or discount that is used by many retail situations to enable consumers to purchase at reduced prices goods and services. Vouchers of this type often provide a voucher code, a simple sequence of alphanumeric that can be scanned to guarantee that the proper discount is applied to the coupon mentioning the discount or the purchase.
- Hotel vouchers: Vouchers are used to take a service at a specific time and place are used in the sector of tourism fundamentally as proof of a named customer’s right. Service providers collect all of them to return to the travel agent or tour operator that has sent that customer to confirm they have delivered the service.
So, the voucher works as follows:
- A customer gets vouchers from the travel agent or tour operator for the services purchased
- The customer forwards the voucher to the related provider on reaching the vacation site and asks for the provided service.
- The provider transfers collected vouchers to the operator or agent that asks for payment for those services and ends customers from time to time
- Uncollected vouchers do not warrant payment
Vouchers are also perceived as ‘source documents’ because they ease the identification of a transaction’s source. Some of its causes include cash memos, pay-in-slip, debit notes, credit notes, invoices, cheques, bill receipts, etc. Purchase vouchers are not generated without receiving the supplier’s invoices. They are also not utilised in the process of payroll payment.