I asked a 24-year-old business owner from the Philippines who sell a surplus of running shoes online about the difference between invoice, bill, and receipt. He scratched his head and quipped “Is there any difference? Aren’t they the same?”
Believe it or not, I used to think the same too when I was his age. When I first started my small pottery business as a neophyte, most of my customers asked for these, but there’d be times when I was told I sent them the wrong one. That’s when I knew that invoice, bill, and receipt work differently, and obviously, they’re not the same. Here’s the article I wrote to help you distinguish them.
In the Philippines for example, there are so-called “written acknowledgments” that come from cash registers or POS (point-of-sale) and are duly registered in the country’s Bureau of Internal Revenue (BIR), or from BIR-approved receipt books. Local and foreign companies registered with BIR are required to issue these depending on whether they applied for value-added tax (VAT) registration or not.
Invoice — or sales invoice is used to request payments for the sales of goods or services from the customer. There are two types of sales invoice common in the Philippines: VAT sales invoice shows how much output VAT a business owes for a particular transaction including the customer’s tax claim.
Non-VAT sales invoice on the other hand shows how much percentage tax the business owes for a particular transaction. The percentage tax is a type of business tax levied on businesses whose gross annual sales don’t exceed PH₱ 1,919,500 and are not VAT registered. Both can be paid by the customer using cash or credit.
Sales invoices can be recurring and sent before payment containing detailed information such as unique invoice number, date of issue, due date, business name, and other related information, customer’s contact details, description and price of goods and/or services provided, and total amount due. Most businesses use sales invoice for financial reporting, taxation, and accounting.
Bill — when a business sends an invoice, the customer receives it as a bill. It shows how much the customer is required to pay for the sales of either goods or services and can serve as proof of transaction.
Receipt — or official receipt is issued by a business upon receipt of payment from the customer, serving as proof of a paid transaction. Just like an invoice, there are two types of official receipts issued in the Philippines: VAT official receipt is used as a reference for business’ output VAT and the input VAT claim of the customer. It may also consist of supplementary receipts.
In contrast, the non-VAT official receipt shows how much a business owes for a particular transaction. In some cases, supplementary receipts (delivery receipts, order slips, acknowledgment receipts, etc.) might be necessary to prove that delivery, selling or transfer of goods and services has been made. It is used to record, monitor, and control purposes in the book of accounts of a business taxpayer.
With the advent of technology, many software companies have developed platforms that make it easier for businesses to create any sales documents including an invoice, bill, or receipt — and Kernel Tools is one of them. We provide businesses tools to help them simplify and automate their process of creating sales documents. In less than a minute, they’re able to create, finalize, and send these to their customers. On top of that, we have financial calculators and simple analytics that increase our users’ productivity, edging the traditional way of preparing sales documents manually out.
Now that you learned the difference between invoice, bill, and receipt, consider trying Kernel Tools for free by signing up here so you won’t be confused once your customers ask for these!