A bill and invoice are terminologies, which are often used reciprocally. Each document is extensively used while carrying out financial transactions. Both have several features in common. However, these documents are quite different from each other. Each document is used at a specific time, for a specific function during a typical financial transaction cycle.
A bill is a document that states the total amount a client owes a supplier or a business after the delivery of goods or services. A supplier sends a bill to their client with the hope of retrieving payment for goods or services. Several businesses send bills to their clients as a reminder for owed payment. A client files the bill into their books as a transaction that requires payment. Also, a bill is in other instances given to a client immediately after a service is rendered. For example, after eating in a shop, you are handed a bill to be settled immediately.
On the other hand, an invoice can be described as a document sent by a supplier to their client, which specifies the content of a transaction. An invoice is usually created based on a tailor-made invoice template. An invoice that is created based on specific requirements is considered legal and must not be altered or changed. Depending on the circumstance, a distortion of an invoice may have legal ramifications.
A seller usually issues an invoice to a buyer for the sale of goods or services on credit. The invoice would specify when the buyer is expected to pay the supplier. For example, you get an invoice for electric maintenance within your home from your local electrician.
Structural Difference Between a Bill and an Invoice
Apart from the difference in definition and function, a bill and invoice are also different structurally regarding input fields. These differences are stated below.
An invoice number is required on all invoices that are issued by a supplier. Any invoice that is devoid of an invoice number can be considered legally invalid. A client is under no obligation to pay an invoice that lacks such a number. This number is usually written at the top of an invoice.
All invoices must contain three dates. These dates are the date of invoice generation, the date of delivery of goods or services, and the due date of the invoices. These dates are critical to the validity of an invoice. The date of invoice generation is usually written at the top of an invoice. The date of delivery of goods or services is usually written against each item. While the due date of an invoice is either written at the bottom of the invoice or against the total amount due.
The information of a supplier is usually written on top of an invoice and the word “invoice”. The company’s names, contact address, and contact information is the main supplier information that is usually written on this document. Having this information on an invoice is crucial as clients are confident; they have received documentation from the right supplier.
The client’s information is usually written within an invoice for the benefit of the client. Doing this is in line with the term of a transaction between the buyer and seller. No client would want to pay an invoice that does not contain their name, as this can become a legal problem in the future.
An invoice would usually have other information written on it, such as the preferred method of payment, tax identification number, and an itemized list (with descriptions) of supplied goods or services. You may even find a message box that allows the supplier to send personal messages to their clients.
A bill is usually devoid of all these features. In most cases, purchased items are highlighted, and a total due amount is written beneath.