Invoice vs receipt

The two get confused because they carry most of the same details — who sold what to whom, and for how much. What separates them is the moment. An invoice is written before the money moves and says what is owed. A receipt is written after it has moved and says what was paid, when and how.

Why an invoice is not proof of payment

An invoice proves a charge was made. It says nothing about whether it was ever settled, and a client's accountant knows that. The US tax authority puts it from the other side: in IRS Publication 583, invoices and receipts are both listed as supporting documents, and "proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction". The payment shows money left; the invoice shows what it was for. A client claiming the expense wants both halves.

In practice most of your clients will have the payment half already — a bank statement shows the transfer. The ones who ask for a receipt are usually the ones whose own process needs a document that says "paid" in words: an expense claim, a grant report, a company that reimburses a person who paid you out of their own pocket.

When one document is both

If the client pays at the moment of the sale — a card at a stall, cash at the end of a session — there is no gap for an invoice to fill. The document you hand over records the sale and the payment at once, and it is fine to call it a receipt.

Where VAT is involved the name matters less than what is on it. In the UK, HMRC's rule in VAT Notice 700 (section 16.2.1) is that a VAT-registered business must give a VAT invoice to a VAT-registered customer, because the customer needs it to reclaim the VAT. For a sale of £250 or less, and only if the customer agrees, a simplified VAT invoice will do (section 16.6.1): your name, address and VAT registration number, the time of supply, a description of what was supplied, and the total including VAT with the VAT rate. On a sale that qualifies, a till receipt showing those can be the simplified VAT invoice; one that shows only an amount cannot, whatever it is called.

What a receipt should say

There is no single legal form for a freelancer's receipt, and what your own country requires is worth checking. The practical content is short:

• Your name and the client's, as on the invoice.
• The amount received, and the currency it arrived in.
• The date it arrived — not the date it was due, and not today's date if you are writing it later.
• How it was paid: bank transfer, card, cash.
• What it settles: the invoice number, or a description of the work if there was no invoice.
• A number of its own, so the receipt can be referred to without confusing it with the invoice it answers.

If only part of an invoice was paid, the receipt says so and says what is left. "Received 500 of 1,200 against INV-2026-041, 700 outstanding" leaves nobody guessing.

Marking the invoice paid instead

Plenty of freelancers never write a separate receipt: they send the invoice back with the payment recorded on it and the balance at zero. For most clients that is enough, and it keeps the two halves of the record on one page. It works on two conditions. The payment date has to be on it, because "paid" without a date proves little. And it must keep its original number — it is the same invoice with a payment noted, not a new document, and a second number for it would put a gap in your sequence that is not really a gap.

Making a receipt in the invoice generator

The invoice generator here has no separate receipt type, but its wording can be changed, and that is enough to produce one:

1. Press + Add amount paid and enter the full amount received, so the balance reads zero.
2. Press + Change wording and set Document title to "Receipt".
3. In the same section, set Due date to "Paid on", then set the date itself to the day the money arrived.
4. Optionally rename the Balance due row to something like "Still owed".
5. Change the number to one of your own receipt series, and replace the default note, which says payment is due — the opposite of what a receipt means.

The last step is the one people miss. A document titled "Receipt" whose footer still asks for payment by a date is a document arguing with itself.