An invoice and a receipt are frequently confused because both are documents with amounts on them, and they sit at opposite ends of a transaction. The invoice asks for money and comes before payment. The receipt confirms money was received and comes after. Everything else about them, including what each is useful for, follows from that.
The invoice comes first
Issued by the supplier before payment, stating what was supplied, what is owed and by when, with a unique number and terms. It creates an obligation in the buyer's records. In business it is a claim to be verified rather than a bill to be settled, which is why buyers check it against what was ordered and what arrived before paying anything.
The receipt comes after
Issued after payment, confirming that a specific amount was received against a specific obligation. It evidences settlement rather than requesting it. In business payables the remittance advice does much of this work from the payer's side, telling the supplier which invoices a payment covered so they can allocate it correctly.
Where the confusion causes harm
Paying from a receipt would mean paying something already settled. Treating an invoice as evidence of payment would mean assuming an obligation is closed when it is not. Both errors are rare individually and both are systematic when a process does not distinguish the two document types at the point of capture.
Questions people ask about difference between invoice and receipt
Can one document be both?
A till receipt in a cash sale effectively is, because the request and the settlement happen simultaneously. Business transactions separate them by design.
Which do we keep?
Both, as part of the record of the transaction. Retention requirements vary by jurisdiction, so check your own obligations.
Is a remittance advice a receipt?
Not exactly. It is the payer telling the payee what a payment covered, which serves a similar purpose from the other direction.
What about a proforma invoice?
A proforma is a quotation shaped like an invoice, issued before supply and not a claim for payment. It should not be entered as a payable, and doing so is a recognised way of creating an obligation that does not exist.
Which one starts the payment clock?
The invoice, from the date it reached the buyer in a correct form. A receipt is issued after payment and has no bearing on the terms at all, which is another reason for keeping the two clearly distinguished in a payables record.