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Invoice vs Bill: What’s the Difference?

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Last editedSep 20222 min read

From sales quotes to billing statements, invoices to receipts, getting paid can be a complicated business. When you finalize a sale, do you send your customer an invoice or a bill? It might seem tricky, but there’s a straightforward way to remember the difference between a bill of sale vs invoice. We’ll discuss the differences and similarities between invoices and bills below.

What is an invoice?

An invoice is a document issued by the business to its client. It lists all the products and/or services provided, along with their prices and the total amount of money owed. Additional details will include:

  • Date of the transaction

  • Client and business contact details

  • Breakdown of cost per unit, shipping charges, or other fees

  • Due date for payment

This accounting document serves as a payment request, submitted to clients after the service has been rendered but before payment has been received. It’s also important for the business to retain a copy of the invoice for accounting purposes. Read about invoice payment methods.

What is a bill?

By contrast, a bill is the document received by a customer after receiving services or goods. It’s written as a statement of these charges, providing a record for the customer of what’s been received. Like an invoice, it’s also issued and received before any payment is exchanged.

Bills are often used in settings like hair salons and restaurants where payment is required immediately. With invoices, there are usually longer payment terms. However, when you receive a bill, you’re expected to pay the amount owed straight away.

Billing statement vs invoice: what’s the difference?

You don’t need to look too hard into the definitions of a bill of sale vs invoice to spot their main differences. While both invoices and bills show the same details about a business transaction, they serve different purposes.

  1. The invoice is generated by the business and sent to the customer

  2. The customer receives a bill and pays the business accordingly

  3. Invoices contain detailed client information, which may or may not be shown on the bill.

  4. You must confirm an invoice payment with a receipt.

Invoice financing vs bill discounting

Understanding the difference between an invoice vs bill is also important because these documents have a direct impact on your business’s cash flow. Sometimes, your customers might need a bit of extra time to pay the bills. To address cash flow issues caused by overdue invoices, you can use invoice financing or bill discounting. So, what do these terms mean, and what is the difference between invoice financing vs bill discounting?

  • Invoice discounting or financing refers to a loan with unpaid invoices used as collateral. The loan is extremely short term, due to be repaid as soon as the invoice funds come in.

  • Bill discounting refers to a bill of exchange. It’s more flexible than invoice financing, which only applies to unpaid invoices that will be paid within 90 days or less. The process involves selling unpaid invoices to a third-party financier at a discount, in exchange for short-term financial aid.

Is there always a different invoice and bill?

They contain nearly identical information, so are there any cases in which a bill and invoice can be one and the same? The answer is yes. You don’t always need to generate a different invoice and bill. Once you’ve created an invoice and sent it to your customer, it then becomes a bill from the customer’s viewpoint. It’s the same document, simply from two perspectives.

Still confused? Online invoicing takes all the guesswork out of the equation. It can help you stay on top of all the ins and outs of a billing statement vs invoice, with automatic payment reminders and tracking.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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