A receipt proves payment. An invoice requests it
They are opposite ends of the same transaction, and people ask for the wrong one constantly.
An invoice says "you owe me this". A receipt says "you have paid me this, and we are square". If a customer asks for a receipt before they have paid, they want an invoice. If they ask for an invoice after paying in cash, they usually want a receipt. Sending the wrong one causes a second round of emails and, on a job that has already been settled, a bit of doubt about whether you are on top of things.
When you have to issue one
In the UK there is no general legal duty to give a receipt for every sale, but there are cases where you effectively must.
- When you are asked. A customer paying cash is entitled to evidence they paid, and refusing looks like exactly what it looks like.
- Cash jobs, always, without being asked. A bank transfer leaves a trail on both sides. Cash leaves nothing, so the receipt is the only record either of you has.
- Deposits and part payments. Money taken up front before work starts is the most disputed payment in the trade. Receipt it the day you take it.
A receipt is not a full tax invoice
If your customer needs to reclaim tax on the purchase, a receipt on its own may not be enough for them, and what it is missing depends on where you invoice from.
In the UK, a valid VAT invoice needs a unique sequential number, your VAT registration number, the tax point, and the VAT shown separately, none of which a plain payment receipt carries automatically. If a business customer is going to reclaim VAT, issue a proper VAT invoice and receipt it separately, or make sure the receipt itself carries everything a VAT invoice needs. Their accountant will send it back otherwise, and you will hear about it in a month.
In Australia, the equivalent document is a tax invoice, and it needs the words "tax invoice", your ABN and the GST amount payable. If you are not registered for GST, that cuts the other way: you must not use the words "tax invoice" on anything you issue, and a receipt is the right document rather than a lesser one. In Canada, what your customer needs rises with the value of the sale: your GST/HST registration number and the tax once the total reaches $100, the buyer's name and an itemised description once it reaches $500. In the US there is no federal invoice content rule at all, so there is no separate document a receipt is falling short of, only the state expectation that sales tax is shown as its own line.
What to put on it
The date the money actually arrived, not the date you got round to typing it up.
That date is the one that matters if there is ever an argument about whether a payment was late. Beyond that: who paid, what it was for in enough detail to recognise the job, how much, how it was paid, and whether anything is still outstanding on the account. This tool states plainly that payment was received with thanks and that nothing further is owed, which is the sentence that stops the follow-up phone call.
For part payments, say what remains. A receipt that looks like settlement in full when it was a deposit is a problem you will meet again at the end of the job.
Keeping them
HMRC expects business records to be kept for at least six years. That includes what you issued, not just what you received.
Give receipts a number and keep the sequence, the same way you do with invoices, so a gap is visible. The tool suggests a numbered reference with the year in it so they group on their own. Save the PDF somewhere that is backed up, because a receipt you cannot produce is a receipt you never issued as far as anyone else is concerned.
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Common questions
What is the difference between a receipt and an invoice?
A receipt proves a payment that has already been made. An invoice requests one that has not. A customer asking for a receipt before they have paid actually wants an invoice.
Do I have to give a receipt for a cash payment?
There is no general legal duty to issue a receipt for every sale in the UK, but a cash job should get one without being asked, because a bank transfer leaves a trail on both sides and cash leaves nothing else.
Is a receipt the same as a VAT invoice, a tax invoice, or a GST/HST invoice?
No, and each falls short in a different way. In the UK a valid VAT invoice needs a unique sequential number, your VAT registration number, the tax point, and the VAT shown separately, none of which a plain payment receipt carries automatically. In Australia a tax invoice needs the words "tax invoice", your ABN and the GST amount payable, and if you are not registered for GST you must not use those words at all, so a receipt is the correct document rather than a lesser one. In Canada what your customer needs depends on the size of the sale: your GST/HST registration number and the tax once the total reaches $100, the buyer's name and an itemised description once it reaches $500. In the US there is no federal invoice content rule to fall short of, so a receipt showing the sales tax as its own line is often all that is expected. If a business customer needs to reclaim tax anywhere but the US, issue the proper document for your market as well as the receipt.
What date should go on the receipt?
The date the money actually arrived, not the date it was typed up. That is the date that matters if there is ever an argument about whether a payment was late.
What if the payment was only a deposit or a part payment?
State plainly what remains owing. A receipt that reads like settlement in full when it was only a deposit is a problem met again at the end of the job.
How long should I keep copies of receipts I have issued?
HMRC expects business records to be kept for at least six years, including what was issued as well as what was received. Numbering receipts and keeping the sequence makes a gap visible.
Do I need to show the tax separately on a receipt?
Yes, if you are registered and charging it, whatever the receipt is for. It is called something different depending on where you invoice from: VAT in the UK, GST in Australia, GST/HST in Canada, sales tax in the US. In all four, showing it as its own line rather than folding it into the price is what lets your customer see what they paid tax on. In the US specifically this is the only rule that bites at all, because there is no federal requirement for what a receipt or invoice contains, only the state expectation that sales tax is stated separately.