What Are the Differences Between Invoice & Bill?
Nowadays, when we shop or pay at a restaurant or do any other kind of transaction, we come across terms such as "invoice" and "bill." Though they are used interchangeably, there are quite significant differences between invoice and bills. Both the business owners and consumers need to know this difference as it serves different purposes for both of them.
Read on to know the meanings of invoicing and billing and their differences.
What Is an Invoice?
An invoice is a document provided by a seller to consumers of goods and services as a business record. It is usually used for credit transactions between a business and its client.
It can be in paper format or digital format such as PDF. Apart from the description of the goods and services provided, an invoice will mention the following information:
- Date
- Employer identification number
- Contact details of the business
- Invoice number
- Payment term
In case of any issues, this can work as a legal document for both the consumer and business owner. An invoice can now also be securely issued using the e-signature system.
What Is the Use of an Invoice?
An invoice can be useful for both parties involved in a transaction. Following are some of the pointers on how invoices can be useful:
- It acts as a legal record of the transaction between the consumer and the seller.
- Business owners use it as a tracking tool for the sales made.
- The seller can use it as a deadline for due payments of the consumer.
What Is a Bill?
What is considered an invoice to the client is considered a bill to the customer. A bill also contains details regarding transactions between a business and its customer. A bill usually comes without a payment term, unlike an invoice.
A bill serves a more immediate purpose than an invoice and is usually provided for cash transactions. A good example will be a restaurant bill where a customer clears the dues before leaving.
What Is the Use of a Bill?
A bill holds greater significance to the customer rather than the seller. Following are a few of the purposes a bill serves:
- It holds a record of the purchase or expenses for the buyer.
- A bill is issued prior to a payment made.
- It is also a reminder for the buyer to clear the dues to complete a purchase.
What Are the Differences Between Invoice and Bill?
Consider going through the following table for a better comprehension of invoice vs. bill.
|
Parameters |
Bills |
Invoices |
|
Transactions |
Transactions are completed promptly. |
Transactions are completed through payment terms. |
|
Application |
For single use. |
Can have recurring purposes. |
|
Goods and services |
Goods and services are provided instantaneously. |
Goods and services are provided on a pre-specified due date. |
|
Details included |
Includes few details such as prices and taxes levied. |
Includes detailed information such as date of issuance, business contact information, unique invoice ID, and due amount. |
|
Purpose |
Works as proof of transaction. |
Works for purposes such as accounting, taxation and reporting. |
