People often get confused between invoices and bills. Are they not the same thing? Generally, yes, both are a type of documents that contains similar information pertaining to a sales transaction, be it for goods or services. However, if we explore a little further, there are nuances between the two.
Invoices contain specific and formal information such as:
Bills, on the other hand, contain limited information on description, price, and taxation, whilst other information such as customer’s details, and payment terms are omitted.
Invoices can be recurring; a bill on the other hand is for one-time use. Bills are generally issued when goods or services are received and paid for immediately.
Bills are commonly used at restaurants, bars, department stores, hair salons or spas.
On the other hand, invoices are usually used for transactions that are not paid for immediately and where more information on the sales transaction is required. For example, if you engage a firm to provide accounting services, you would typically receive an invoice for the work performed and be allowed time to pay at a later date.
Typically, customers in the B2C industry will generally refer to this document as a ‘bill’. For example, at a restaurant, a customer would most likely ask for the ‘bill’ rather than an ‘invoice’.
From a B2B perspective, you may issue an invoice to your customer (accounts receivable) and also receive an invoice from your supplier (accounts payable).
For B2B businesses, invoices are used almost exclusively, whether payment is expected immediately or on credit terms. Having an invoice for a transaction helps with bookkeeping and tax records.
Invoicing is also a crucial step in the procurement process. The process generally follows the below steps:
Invoices and bills are there to ensure that your business can correctly receive payments from your customers. Therefore, it is critical that your business has the procedures and processes in place to create and issue either or both documents promptly and accurately. This will help with ensuring your business gets paid on time and avoid late payments and bad debts.
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