The short answer: an invoice is a request for payment sent before money changes hands. A receipt is proof of payment issued after. The invoice says "you owe me this"; the receipt says "you paid me this".
Side by side
| Invoice | Receipt | |
|---|---|---|
| When it is issued | Before payment | After payment |
| What it does | Requests money and states terms | Confirms money was received |
| Key contents | Line items, total due, due date, payment instructions | Amount paid, date paid, payment method |
| Accounting role | Creates an account receivable | Settles it |
| Who keeps it | Both parties, until paid | Buyer, as proof of purchase and for expenses |
When you send an invoice
Any time you deliver work or goods first and get paid later: freelance projects, consulting, wholesale orders, rent, retainers. The invoice starts the payment clock, so it needs a due date or terms like "due within 14 days", plus everything on our invoice checklist.
When you issue a receipt
The moment payment lands, in cash-up-front situations (retail, food, events) or after an invoice gets paid. Buyers need receipts to claim business expenses and, sometimes, warranties.
Can one document be both?
Practically, yes. A common pattern for small businesses: once an invoice is paid, re-issue the same document marked PAID with the payment date. Many buyers will accept a paid-marked invoice as a receipt. If a client explicitly asks for a receipt for their records, a one-line document stating the amount, date, payment method and the invoice number it settles is enough.
The tax angle
Tax authorities generally care about both: invoices establish what you earned and when (accrual accounting recognises revenue at invoice date), receipts and bank records prove settlement. Keep both, number your invoices sequentially, and reconciliation at tax time becomes mechanical rather than forensic.
Need the first half of that pair? You can make a free invoice in under a minute, no account needed.