Thursday, December 28, 2023

Invoice vs Receipt

An invoice and a receipt are both documents related to the process of buying and selling, but they serve different purposes.

Which one should I upload for expenses?
A receipt is better.

If you have to choose between an invoice and a receipt for tracking expenses, a receipt is generally more suitable because it is direct evidence that a payment has been made. It confirms that the transaction has been completed and the expense has actually occurred.

Purpose:

Invoice: A request for payment for goods or services rendered.
Receipt: Proof of payment for goods or services purchased.

Timing:

Invoice: Issued before payment, often to initiate a payment process.
Receipt: Provided after payment as confirmation that payment has been received.

Legal and Tax Implications:

Both the invoice and the receipt can be legally binding documents.

Invoice: Indicating an obligation to pay.
Receipt: Serves as evidence that a transaction has occurred.

For reconciling bank statements and during audits, receipts provide the necessary proof of payment, making them essential for validating expenses for your business.