You might have come across the terms ‘invoice’ and ‘receipt’ in your day to day work life. You also might be knowing that they relate to the document pertaining to the transaction or trade between two parties. Both of them are non-negotiable commercial instruments used while a product/goods or service is rendered from one party to another. But there is a thin line of difference in these two terms. Did you know that?

So, let’s take a look at both of them and get a better understanding of how and when to use them in business.

Invoice:

An invoice can be explained as a document (bill) with the itemized list of goods/products/services rendered by the business owner (seller) to the client (buyer). Usually, an invoice or bill is issued consists of details such as in accordance to get paid within a stipulated period of time.

It is a proof of sale and generally includes the total amount due, due date, contact information of the businesses involved, discount, tax information and place of delivery.

Receipt:

A receipt is another kind of document that is proof for the above-mentioned invoice is paid in full by the buyer or customer. An invoice is generated before the payment is made and the receipt comes after the payment has been made.

In the daily business trade, a receipt indicates that the goods and services are received and represents the ownership of the item.

As a business owner, you can opt for the best online invoicing application that lets you generate quick invoices.

How Are They Used?

Invoices have many underlying aspects besides just receiving the payment from the buyer. It also allows you to keep track of sales, manage product inventory, facilitate the delivery of the goods, etc. From the top small business billing app, which provides you expense reports and insights also help you to project future revenues. Additionally, you can also get time tracking and recurring invoice features along with it. It helps you manage customer relationship by offering cutting-edge solutions.

On the other hand, receipts are used by customers to prove their payment against the invoice generated. This majorly helps in the situation wherein a buyer needs to return an item in the event of faulty or defective goods. E-invoicing tools provide immaculate data analysis of your business. If used properly and at its optimum level, it gives you every small but crucial detail and insights of your business and of course, you can have the real-time preview of your business performance.

Summary:

Moon Invoice, a simple and easy invoicing platform that can be accessed on any smartphone with any operating system have a wide range of customers whose payment methods has been simplified by offering multiple payment options and also simultaneously catering to the numerous features related to invoicing, estimates, purchase order, expense tracker, time tracker, sync, print, payment notifications and many more. Let’s discuss the ‘Payment’ while keeping the general invoicing features in mind.

With Moon Invoice, your business will enjoy simplified payment with multiple options and avoid payment delays. Following are the payment features to adopt that will lead to ‘Upward Shift In Bill Pay Services’ and will also address the long-awaited need to reduce the use of paper checks in order to be compatible with fast-paced business momentum.

Additionally, Moon Invoice lets your business be on top of the competition with Instant Invoicing & Billing, an Easy track of Payment & Notifications, Accurate Insights & Reporting Data. Few amazing add-ons with Moon Invoice are that you can add & “Manage Multiple Businesses”, “22+ Professional PDF Templates”, “Import/Export & Print Utility” and data backup “iCloud sync & MoonSync support”.

Recurring Payments Vs Recurring Invoices

Recurring Payments	Recurring Invoices
Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved.	Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves.
A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this.	A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies.

Pros and Cons of Recurring Invoices

Pros	Cons
You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered.	You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created.
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly.	It could be difficult to cope with recurring invoices if a transaction fails for any reason.

Net 45	Invoice is due in full within 45 days with no early payment discount offered
2/10 net 45 terms	2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/15 net 45 terms	1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days
1/10 net 45 terms	1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/7 net 45 terms	1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days

Category	Net Method vs. Gross Method	Explanation
Calculation Approach	- Applies tax credits first; reduces taxable income before computing tax liability.	- Doesn't apply tax credits; computes taxable income without considering tax credits.
Tax Credit Eligibility	- Allows for greater likelihood of tax credit eligibility due to reduced taxable income.	- Limits tax credit eligibility because taxable income hasn't been reduced yet.
Itemized Deduction Requirement	- Lowers threshold requirement for itemizing deductions due to decreased taxable income.	- Raises threshold requirement for itemizing deductions due to higher taxable income.
Advantages	- Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits.	- Results in higher taxable income compared to net method.
Disadvantages	- May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits.	- Increases taxable income and may result in higher overall tax bill.