You received an invoice from the supplier. In your software you might label it as a bill. Often the same money is being talked about. Make the direction clear and then separate the request for payment, the receipt of money and reconciliation. The name is not a payment status.
In your customer's world they need an invoice. In your software there's a Bills section. Maybe you don't need another document. Figure out whether it's inbound or outbound first. Then figure out what you need the recipient to do.
Your invoice to a customer
From the seller's point of view, an invoice is generally issued after delivery, service delivery or reaching the billing stage in the contract. The invoice generally has a unique number, the details of both parties and a breakdown of amounts. This enables tracking of amounts that are invoiced, amounts due and related payments. The buyer might label the same document as a supplier bill.
- From the seller to the customer.
- Generally with itemised details and a number.
- Might have a future payment date.
- Enables the seller to record a receivable.
A supplier invoice might be a bill
The term bill is often used for restaurant meals, electricity, telephone services, repairs and professional services. Some may be due immediately and others might have a future due date with detailed terms. You can't necessarily determine from the name alone how formal or detailed it is, or whether it's due or paid.
- Often from the customer's point of view.
- Might be due immediately or have agreed terms for payment.
- Might be the invoice received from a supplier.
- Enables the buyer to record a payable.
What do those four names mean?
A new payment request may not help if the customer asked for proof of payment. A new invoice may not be what they are looking for either if they wanted account reconciliation.
| Name | What it means |
|---|---|
| Invoice | Explains the amount receivable for goods or services |
| Bill | Explains money payable or an amount billed |
| Receipt | Confirms what payment has been received |
| Statement | Summarises transactions, payments and balances over a period |
A purchase order, or PO, is the buyer's purchasing authorisation. A transaction can start with a PO, then go through delivery and invoicing, the buyer recording a bill and paying, then a receipt or payment record. Connect these documents by reference instead of treating each as a new transaction.
- PO authorises a planned purchase.
- Invoice or bill requests payment or records money due.
- Receipt confirms the money received.
- Statement summarises account activity.
Ask what they want if they ask for a bill
“Do you want the payment request for this project, or a receipt for the money you have paid?” Ask what type of document they want and the billing information they need for reimbursement, tax and so on. The Chinese word for invoice may refer specifically to a tax invoice. A normal commercial invoice will not automatically satisfy every requirement.
An invoice is quite common for professional services and business transactions when itemisation, references and payment terms are needed. If the customer usually says bill, provide the information needed for accurate payment and records. Don't send out two ambiguous documents for the same payment request, which might trigger duplicate payment or questions.
With Pocket Invoice, you can create numbered, itemised commercial invoices and export custom PDFs.
- Call it by a name customary in the industry.
- Have one primary payment request.
- Use the same number across systems.
- Issue an appropriate receipt or payment record when money has actually been received.
One deal, two points of view
Consider a maintenance scenario. The amount invoiced is 900. The seller needs to know if this 900 was paid. The buyer needs to know whether it is approved and has been paid. Both can cite the same invoice number for communication. Do you start with a sale or a purchase? The name alone does not change who owes whom.
Everyday words and software terms may not overlap perfectly
Bills at restaurants or in shops often expect payment now. Professional services or business purchases may require approval and have a project number, service period or accounting contact. These are habits, not universal legal definitions.
A bill can show detailed line items with a future due date. An invoice can also be due now by agreement. The contents, transaction and applicable rules determine tax and accounting treatment, not only the name. The UK GOV.UK invoicing overview uses invoice and bill together and distinguishes a receipt as an acknowledgment of payment. The VAT requirements refer to the UK transactions described there.
Don't ask for the same money twice with a statement
A statement can show multiple invoices, payments and a total for balance reconciliation. It might not substitute for the original documents the customer needs for each accounting entry.
Consider 300 and 500 on a statement. After a payment of 300, the balance would be 500, not 1,300. If records don't agree, use references to find the difference and then decide which record or payment you need.
Recurring amounts also need periods and payment status
For website maintenance, rent, subscriptions and ongoing consulting, the amount may be the same every month, but each period should have a number, service period, issue date and due date. Two documents with the same service fee cannot be defined as duplicates simply because they have the same amount.
If a payment covers multiple months, ask which documents it is for. When it is an advance payment, record its purpose. Which period is cleared? Don't just decrease the total balance.
Also record automatic collection. Has the money been collected? Has the amount changed? Are cancellations or refunds reflected? Storing the payment method does not mean that the bill has been paid.
Check direction, payment status and duplication before entry
Is it a sale or a purchase? Is it paid or not paid? Is the same thing already entered? Do not expect the software categories Invoice, Bill and Expense to answer these questions.
Supplier bill to pay: check the parties, goods or services, approval and payment information. Your invoice: check delivery, track the due date and match received money to the balance. On receiving a receipt, connect it with the transaction for which the payment was made.
| Document received | What next? |
|---|---|
| Supplier invoice / bill | Check, approve and arrange payment |
| Statement | Match documents and payments |
| Receipt | Connect with the transaction for which the payment was made |
| Credit note | Make the adjustment to the appropriate balance |
If you use a bank statement to confirm payment of a bill that is already entered, connect it with the original entry; do not create the same expense again. Customer payments clear the original receivable. Do not create an additional sale for the same amount. Follow the process in your system.
Keep the software categories connected to the transaction
If your software separates Sales Invoices and Bills, it probably distinguishes what customers owe you from what you owe suppliers. You make it clear when you tell your accountant or customer, “This is the payment request for September services” or “This supplier bill is paid.” You don't have to require everyone to use the same word.
Frequently asked questions
Is a bill always simpler than an invoice?
Not necessarily. The distinction is not just the level of detail. This varies by business and system. Just the title doesn't tell you directly about legal status or payment.
Do I pay straight away when I receive an invoice?
Look at your agreement and document. What is the payment date? Receiving, confirming the amount, becoming due and actually paying are different things.
Is a bill the same as an invoice?
They're often the same debt. Invoice is often the seller's detailed request. But bill could refer to the buyer's payable or a supplier invoice received. In casual language you're not always able to tell them apart.
Can a bill contain payment terms?
It can specify a payment date in the future. Detailed terms. Just because the title is different doesn't stop it containing the same details about how to pay as an invoice.
Do I need to get a receipt for paying an invoice?
It's helpful for both parties to track payment so things can be reconciled. This might be a receipt, paid invoice or confirmation from the system. It depends on the payment method and rules where you are. The recipient should check that the money was actually received. Don't just assume so based on the document title.