Sales Receipt or Invoice?

At first glance, a sales receipt and an invoice may seem interchangeable. Understanding the application of each form is significant for accurate reporting and can increase efficiency.

Sales Receipt: The creation of a sales receipt is a complete sales transaction. Your revenue account is credited and cash is debited (increased). Use a Sales Receipt when your customer pays at the time of the sale.

Invoice: Creating an invoice allows you to track unpaid items and manage open invoices through Accounts Receivable. The creation of an Invoice is only part of a complete sales transaction. Your revenue account is credited immediately and Accounts Receivable is debited (increased). The sales transaction remains open until you have received payment. When you receive payment against the invoice, Accounts Receivable is credited (decreased) and Cash is debited (increased). In other words, the asset is transferred from Accounts Receivable to Cash. Use an invoice when you are accepting all or part of the payment later.