Receipt vs invoice (and quote, estimate, bill)

A receipt says you have been paid. An invoice says you owe me. A quote or an estimate says this is what it will cost. A bill is another word for an invoice, usually from the side of the person paying it. This guide explains how the five documents differ, which one to send at each step of a job, and the mistakes that cause arguments about money later.

The short answer

The five documents sit at different moments of the same job. Before the work, you send a quote or an estimate. After the work, or when payment is due, you send an invoice (the customer may call it a bill). When the money arrives, you send a receipt. If a customer pays on the spot, you can skip the invoice and hand over a receipt.

The reason to keep them apart is simple: each one answers a different question, and mixing them up leaves the other person unsure what you want from them. An invoice that looks like a receipt can lead to a customer who thinks they have already paid. A receipt sent before the money arrived can be a problem for you.

What each document is

Quote

A quote is a price you offer for a clearly described piece of work or set of goods. "Replace the kitchen faucet, supply the faucet, $420." The customer can accept it, and then both sides have an agreed price. Because a quote is a promise, it should say what is included, what is not, and how long the offer is open. The estimate maker has a "Valid until" date for this.

Estimate

An estimate is your best calculation of what a job will cost. It can change when the job turns out bigger or smaller than it looked, for example when a plumber opens a wall and finds more damage. A good estimate says what could move the price and how you will tell the customer before it does. Many people write "estimate" and mean "quote", and the reverse. Pick the word that matches what you intend, and say so in a sentence.

Invoice

An invoice is a request for payment. It lists what you did or sold, the amount due, the date it is due and how to pay. It usually has a number so both sides can refer to it, and it may come after the work or, for deposits and prepayments, before it. An invoice is not proof that anyone paid; it is proof of what you asked for.

Bill

"Bill" is the everyday word for the same thing from the payer's point of view. A restaurant bill, a utility bill and a contractor's bill are all requests for payment. In bookkeeping the word has a narrower meaning: a bill is an invoice your business receives from a supplier and has not paid yet. If you are the one asking for money, call your document an invoice.

Receipt

A receipt confirms that a payment was received. It shows the date, the amount, what the payment was for, how it was paid and who received it. It is the document you hand over after the money has changed hands, and the one a customer keeps for their records, a return, a warranty claim or their own taxes. A payment receipt does the same for money that is not a sale, such as a deposit or a part payment.

The order they come in

1. Customer asks. You visit, measure, or ask questions about the job.
2. You send a quote or an estimate. Price, scope, what is not included, how long it is valid.
3. The customer accepts, by signing, replying or paying a deposit. Keep that answer.
4. You send a receipt for the deposit if you took one. It shows what has been paid and what is still due.
5. You do the work. If the price changed, say so in writing before the final invoice.
6. You send an invoice with the total, the deposit already paid, the balance and the due date.
7. The customer pays. You send a final receipt marked paid in full.

Small jobs skip steps. A coffee shop only ever hands out receipts. A freelance designer might go straight from a quote to an invoice and a receipt. What matters is that each document you do send says plainly what it is.

Comparison table

Four examples

A plumber fixing a leak

The plumber looks at the leak and sends an estimate: two to three hours of labor plus parts, "final price may change if the pipe behind the wall is damaged." The homeowner agrees and pays a $100 deposit, for which the plumber writes a payment receipt. After the repair the plumber sends an invoice for the full amount, shows the $100 as already paid and asks for the balance within 14 days. When the balance arrives, a receipt marked paid in full closes the job.

A freelance writer

The client wants five articles for a fixed fee. The writer sends a quote with the number of articles, the length, the number of revisions included and the fee. After delivery the writer sends an invoice with a number and a due date. When the client pays by bank transfer the writer sends a short receipt.

A landlord collecting rent

Rent is due on a date set in the lease, and there is usually no invoice at all: the lease is the request for payment. What the tenant needs is proof of payment, which is a rent receipt that names the property, the rent period and the amount. Some states require one in some situations; see our guide to rent receipts and the law.

A market stall

A customer pays cash for a handmade chair. Nobody needs an invoice. The seller writes a receipt with the date, the item, the price and the payment method. The buyer keeps it as proof of purchase.

What each one should contain

A few lines are worth putting on every document, whichever one it is:

• The word that says what it is, at the top: Quote, Estimate, Invoice or Receipt.
• Your business name and contact details, and the customer's name.
• A date and a number, so you can find it later.
• What the document is for: items or services, with quantities and prices.
• Sales tax, if you charge it, on its own line.
• The total.

And a few lines that are specific to each:

• Quote and estimate: what is included and excluded, how long the price is valid, and the deposit you want.
• Invoice: the due date, how to pay, any late fee you have agreed in advance, and any deposit already received.
• Receipt: the amount actually received, how it was paid (cash, check number, card, transfer), and whether a balance remains.

Common mistakes

• Calling an estimate a quote. The customer hears a fixed price; you meant a guess. Write which one it is and what could change it.
• Sending a receipt before the money has arrived. If a check bounces or a transfer is pending, a "paid" receipt is hard to take back. Send an invoice, then a receipt when the funds are in.
• An invoice with no due date or number. "Please pay soon" is not a date, and without a number two invoices for the same customer are easy to confuse.
• Forgetting the deposit. The final invoice should show what has already been paid and the balance. Otherwise the customer pays twice or argues about it.
• A receipt with no description. "Received $500" does not say what for. Add the item, the invoice number or the rent period.
• Not keeping copies. Save every PDF you send. A document you cannot find is a document you cannot rely on when there is a disagreement.
• Treating the document as a contract it is not. A receipt records a payment; it does not set terms. If the job needs terms, such as who is responsible for what, write them down in an agreement. Some states and cities have specific rules for written estimates or contracts for certain kinds of work, so check yours.

This guide describes common business practice for general information. It is not legal, tax or accounting advice.