Last editedJul 20213 min read
You need a record of sales for your business, and your clients need proof of payment. This is where a sales receipt enters the picture, a simple document covering the transaction details. What is sales invoicing and how does it relate to receipts? We’ll cover the differences below.
How does a sales receipt work?
A sales receipt is simply a record of a transaction issued at the point of sale. This might be an email sent to the customer for online purchases, or a paper slip printed out from a cash register. If you look at any basic sales receipt template, you’ll usually see the following components included:
Business name and address
Transaction date and time
Item or service sold
Cost of item or service
Tax may or may not be included in the sales receipt template, depending on whether VAT or other charges need to be included. There might also be some promotional information like a discount code to use on future sales, a QR code, or the sales associate’s name.
Types of sales receipts
Provided it covers the basic information listed above, you can generate many different types of receipts. There’s no single receipt format to use, but here are a few common options:
Cash register receipts
Mainly used in retail or food services, cash register receipts are issued at the point of physical sales. The cash register is loaded with large rolls of paper. As goods are purchased, the cashier prints off a receipt listing all items, prices, total paid, date and time of transaction, and method of payment.
Travelling sales associates will often carry their own blank sales receipt templates on the road. They fill in the details by hand when making a sale, including the transaction information as well as the customer contact information.
Online businesses often send out two sales receipts: one electronically when the order is placed, and a separate paper receipt inside the box when the order is shipped. The packing slip not only includes all the relevant transaction details, but it usually also includes information about returns.
What is sales invoicing?
A sales invoice is another type of receipt that’s a bit more detailed. While receipts are issued at the point of sale when payment has been received, an invoice is issued to request payment from the customer. Like a receipt, a sales invoice will list basic details including the merchant’s name and address, date of sale, description of goods or services and accompanying costs.
Yet in addition to the transactional details, the invoice will also include the amount owed, deadline for payment, and payment options. You can use a free template to get started.
Why should you issue sales receipts?
Whether you issue sales receipts or invoices, it’s important to keep a written record of all business transactions. Here are a few key reasons to provide sales receipts or invoices:
1. Accurate bookkeeping
Invoices and receipts provide the foundation of your accounting system by creating a written record of each sale. Whether issued in person or electronically, copies of every sales receipt should be stored in a filing system. Accounting software automatically stores this information for you for future use in financial records and cash flow reports.
2. Tax preparation
Sales receipts are also vital for filing your tax returns as they provide a complete written record of company revenue. At the same time, you should keep your own receipts for company expenses.
3. Legal purposes
In addition to filing taxes, you might need to refer to sales receipts should a lawsuit be brought against your business. These show the date when you rendered services as well as a timeline for any work completed. Invoices are particularly useful because they show payment terms, which is helpful for chasing up on late payments.
4. Inventory management
Finally, issuing and storing receipts can assist with inventory management. You can use receipts as a record of transactional data, analysing which products are selling at which times. This helps with future forecasting and assessing product demand.
Whichever sales receipt format you choose, be sure that it lends itself well to easy storage. Online filing systems and accounting software make short work of issuing invoices and receipts. Storing them online also means you can retrieve data as needed when the time comes to draw up your financial statements.
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.