Career Development

Bill vs. Invoice: What's the Difference?

February 22, 2021

Any business that sells products or services to customers or other businesses probably keeps track of and gets paid for these items through invoices or bills. There are other transaction receipts that any one person or company may use depending on their bookkeeping preferences or the type of transaction that takes place. It's important to use these items so there remains proof of services rendered and payment paid and received. In this article, we share the difference between a bill and an invoice and discuss the other types of transaction receipts you may receive or work with.

Related: Accounts Payable: Definition, Skills and Careers

What's the difference between a bill and an invoice?

Many times, the terms bill and invoice are used interchangeably. However, there are some differences. Here are some distinctions between an invoice and a bill:

What is an invoice?

An invoice serves as documentation of the products and/or services that the business has provided to a customer. An invoice is a type of bill that includes an itemized list of those products or services. This list shows how much each item or service costs. An invoice also includes the total amount owed, the due date and any additional payment terms, like if the company is giving their customer the option to pay monthly payments versus one amount.

One major difference between a bill and an invoice is that companies usually send out invoices to collect payment on products or services they have already supplied to their customer. In this case, the customer received a short-term credit from the company they did business with and will need to pay their invoice according to the payment terms outlined on the invoice. For example, a company that provides cleaning services to a business may invoice them for services rendered after they have already completed the job.

Related: What Is an Invoice? Definition, What's Included

What is a bill?

A bill is typically more immediate than an invoice, with the sender providing the bill right away and requiring prompt payment, usually without the option of payment terms. For example, if you eat out at a restaurant, you'll receive the bill for your food before you leave the building and you are responsible for paying it immediately.

While some businesses may refer to what they send customers as an invoice, a customer may refer to this same item as a bill. You could look at an invoice as what a business sends and a bill as what a customer receives.

Related: Learn About Being a Billing Specialist

Other types of transaction receipts

Besides invoices and bills, there are other types of transaction receipts. They are:


A customer may need a business to provide services, or a business may partner with a vendor who is supplying goods or services to their office. It's common for the recipient of the products or services to request an estimate of the cost they can expect to pay. This helps a customer or business budget appropriately. They may also get estimates from several companies or vendors to compare prices before choosing who to hire.

An estimate differs from a quote, too. While a quote is an agreed-upon and fixed price for products or services, an estimate is approximate and may change based on several factors.

Sales receipt

A sales receipt is what you would receive from a company once you've paid your bill or invoice. It serves as proof of payment. Many people keep their receipts in case they need to return a product or refer back to the services they received. It's also important for customers to retain their receipts in case there are any questions about payment.

Some receipts are printed once and provided to the customer, like in the case of you purchasing hardware supplies from the store. Other companies may handwrite their receipts on carbon copy paper so that the customer receives one receipt and the business can retain a copy for their records, both as proof that a customer paid and that the customer received a copy of their receipt.

A sales receipt should include the business name, date of transaction, items or services that the customer purchased, the cost of each, how much the customer paid and the method the customer used to pay, whether that be cash, credit card or check. A sales receipt may also include the customer's name, if applicable for the business, and the customer's signature to confirm payment. Product-based businesses may put their business details, such as a phone number and address, on their receipts so customers can easily contact them if needed.

Expense report

It's common to use expense reports in business settings when employees have to pay for items out of their own pocket and their employer reimburses them. For example, an employee may be responsible for arranging and paying for their travel to a conference and they must turn in their receipts and a company expense report before the accounting department issues a reimbursement. Another common example is when sales professionals have to pay for their own gas when driving to meet with clients, then submit an expense report to their employer for money back for gas and mileage.

Related: How to Report Business Expenses


A statement is something a customer can request from a business to figure out what the status of their account is. A statement may include past sales transactions, credits or payments that a customer has paid within a certain timeframe. It's common for businesses to send periodic statements to customers who are on a payment schedule so the customer remains aware of how much they still owe for their purchase.

A type of statement you may be familiar with is a bank statement. A bank statement includes all the financial transactions you have performed using your debit card, credit card or checks. It'll also include any payments you've made, like when you make a credit card payment to your account or a payment to an outside vendor. Your bank statement will show you any direct deposit payments, like from an employer.


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