Receiving payments is every freelancer’s favorite part of freelancing—who doesn’t love getting paid for their hard work? But freelancing isn’t just about delivering services; it’s also about running a business.
A big part of that business involves managing payments. You have probably come across the terms “invoice” and “receipt.” While they’re sometimes used interchangeably, they’re not the same.
Simply put, invoices are a request for payment, while receipts confirm that payment has been made.
In this guide, we’ll break down the differences between invoices and receipts, and show you when to use each to manage your payments like a pro. Let’s get started!
What is an invoice?
An invoice is a document you send to a client to officially request payment. It outlines the services or products you’re providing, along with their quantities and prices. For example, if you’re invoicing for social media management, it might include the number of posts you’ll create or the specific tasks you’ll handle.
Typically, you send an invoice before you begin offering your services, making it clear to the client what they’re being charged for and when payment is due.
It’s best practice to include an invoice number because it helps you track payments and stay organized as a freelancer.
Here’s what you should include in a standard invoice:
- Your business name and address
- The client’s name and contact information
- An invoice number for easy tracking
- The date the invoice was issued
- An itemized list of services or products being billed
- The total amount to be paid
- The payment due date
- Payment details (e.g., bank account or credit/debit card info)
What is a receipt?
A receipt is a document that shows proof of payment for a transaction. You issue a receipt after completing a service or delivering a product and receiving payment. For example, when a client pays for your services, their bank might provide a payment receipt, which they can share with you. Alternatively, you can create and send a receipt to your client using invoicing software or a simple template.
Receipts serve as a financial record of the transaction. Clients use them to document payments, and while they aren’t always common in freelancing, they add professionalism and transparency to your transactions.
A standard sales receipt includes:
- Business name and address
- Quantity of items or services provided
- Total amount paid
- Date of payment
- Signature (optional)
What’s the difference between an invoice and a receipt?
An invoice and a receipt serve different purposes, even though both are used to manage payments. The key differences lie in their timing, composition, and function. Understanding the differences between both documents will help you manage payments more effectively as a freelancer and maintain clear communication with clients. Let’s break it down.
- Composition: Invoices include detailed information such as account details, payment terms, items or services being billed, and the total amount due. Receipts, on the other hand, are more concise. A standard receipt typically includes the business name, total amount paid, balance (if any), and a signature.
- Timing: The timing of each document is another key difference. Invoices are sent before a payment is made, usually at the start of the sales process, to request payment. Receipts, however, are sent after payment is completed and serve as proof of the transaction.
- Function: Invoices initiate the payment process by outlining what’s due and by when. On the other hand, receipts finalize the process by confirming that the payment has been received.
- Legal Value: Invoices are used as a formal request for payment and may serve as evidence of a client’s obligation to pay. Conversely, receipts act as proof of payment and are often used in audits or tax filings.
When to use a receipt and invoice
Invoices and receipts serve different purposes, and it’s a good idea to keep both for your accounting records. While they shouldn’t be used interchangeably, knowing when to issue each can simplify your payment process. Here’s how to decide:
When to use an invoice
As a freelancer, you typically send invoices to request payment. Invoices are ideal for:
- Requesting payment before starting a service.
- Detailing the services you plan to provide, including quantity and costs.
- Informing clients about the costs of working with you.
- Serving as a legal document that outlines your deliverables, costs, and payment terms—especially if you don’t have a formal contract.
When to use a receipt
After receiving payment, you can issue a receipt to confirm the transaction. Receipts are useful for:
- Confirming that payment has been received.
- Providing the client with proof of payment for their records.
- Having legal evidence that the transaction was completed.
- Maintaining accurate financial records for bookkeeping, audits, or tax filing purposes.
Invoices and receipts work together to keep your transactions organized and transparent for both you and your client. Using them the right way helps you stay professional, track payments easily, and keep things simple when it’s time to handle taxes or review your finances.
How to create an invoice and receipt + Templates
Creating invoices and receipts doesn’t have to be complicated. You can find sample templates online or through design platforms like Canva and Google Docs. The templates are user-friendly, customizable, and ideal for freelancers and small businesses.
Here’s how to create an invoice or receipt using Canva:
- Create an account or log in.
- Search for “invoice templates” or “receipt templates” in the search bar.
- Choose a template that meets your needs and customize it with your business details and relevant transaction information.
- Export the document in your preferred format—PDF is recommended for security and professionalism.
If you need more advanced features you can try tools like QuickBooks or PayPal as they make it easy to generate, track, and share invoices and receipts automatically. Here’s a sample template to get you started:
Manage your payments with Mular
Invoices and receipts are just one part of the payment process for freelancers. With clients from different countries and payments to track, managing finances can get complicated. Mular simplifies this by letting you receive USD as USDT from anywhere and save it, or spend it directly as Naira.
To use Mular, download the app and copy your wallet address. Add it to your invoices when billing clients. Once they complete the transaction, you can issue a receipt. Payments through Mular are fast, often taking about a minute, and the platform keeps your funds secure, helping you manage international payments with confidence.