You may consider using either a bill or an invoice depending on the frequency of payments. They both record data on the goods and services associated with the transaction and contain information about how much a customer owes.īut there are several key differences between a bill and an invoice, and this can matter a great deal when it comes to your company's accounting practices. Key Differences Between a Bill and an Invoiceīy now you probably understand how the terms invoice and bill might create confusion. □ Tip: In comparison to a bill, an invoice has more specific information and details such as the description of services provided as well as payment terms. If you need to make or send an invoice it is important to keep in mind what to include on the invoice and how you send it in order to look professional. Invoices are important documents for financial reporting, taxation, and accounting.Īny business can issue invoices, however, they are most common for businesses that make large, bulk purchases, as well as contracting services, such as construction, web development, educational services, and any services that charge an hourly rate. For example, it should be numbered appropriately, and once an invoice has been finalized, it should not be deleted. Since an invoice serves as a legal document, it needs to be handled as such. If there’s an account dispute between parties, invoices can be legally enforced to collect payment for accounts receivable. It can be on paper or in a digital document such as a PDF. The business sends an invoice before payment is received, as a way to request payments by a specific deadline, this is referred to as payment terms. In addition to a description of the products or services provided, an invoice will state the amount due, the due date, and also the specific payment terms and payment method. It is a document used as a payment request, as well as for documenting the goods and services involved in a business transaction and therefore supporting internal accounting and VAT processes. You can see that the details in the document are simple and straight to the point, with the amount due provided as well as the next bill date.Īn invoice is defined as a commercial document issued to a customer following the exchange of goods and services. □ Tip: If your customer calls you and asks about their “bill”, remember that they might be referring to an invoice you just issued because the perspective matters a lot in transactions and actually determines whether the term bill or invoice is the right one.īelow is an example of a bill. Bills serve as legal evidence of the transaction. For instance, in a B2B setting, bills payable show the amount customers owe for the goods and services sold on credit and are expected to be paid by a certain date. There are also cases where payment is not immediate after a bill has been issued, but merchants or service providers include a pay-by date. Recurring bills can be for example credit card bills, bills by internet providers, or utility bills. In a B2C setting, for example at the grocery store, the buyer is expected to pay immediately after receiving the bill.Ī bill can be less formal than an invoice because it is more commonly used in transactions that are completed in one go.Ī bill typically has a one-time use, but can also be recurring depending on the nature of the goods or services. The expectation typically is immediate payment. A bill is a document issued by the vendor outlining the amount a customer owes for goods received or services purchased from the vendor in a sales transaction. It is issued before payment is sent and it implies to its receiver that a payment is due.
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