Invoice vs Receipt vs Proforma Invoice: What’s the Difference?
Many freelancers and small business owners use the terms invoice, receipt, and proforma invoice interchangeably. While they may look similar, each document serves a different purpose. Using the wrong one at the wrong time can confuse clients, delay payments, or cause accounting issues.
This guide explains the difference between an invoice, a receipt, and a proforma invoice in simple terms, with examples of when each should be used.
What Is an Invoice?
An invoice is a formal document sent by a seller or service provider to request payment from a client. It lists the services or products provided, their cost, and the payment terms.
An invoice is usually sent after the work is completed or after a specific milestone is reached.
What an invoice typically includes:
Invoice number
Invoice date
Seller’s name and contact details
Client’s name and contact details
Description of services or products
Quantity or hours worked
Price and total amount
Taxes (if applicable)
Payment due date
Purpose of an invoice:
To request payment
To serve as a legal and financial record
To help track income and outstanding payments
In simple terms, an invoice says:
“This is what I provided, and this is how much you need to pay.”
What Is a Receipt?
A receipt is a document that confirms payment has already been made. It is issued after the client pays the invoice.
Unlike an invoice, a receipt does not request payment. Instead, it proves that payment has been received.
What a receipt typically includes:
Receipt number
Date of payment
Amount paid
Payment method (cash, bank transfer, card, etc.)
Reference to the original invoice
Purpose of a receipt:
To confirm payment
To serve as proof for the client
To help with bookkeeping and taxes
In simple terms, a receipt says:
“Payment has been received.”
What Is a Proforma Invoice?
A proforma invoice is a preliminary or estimated invoice sent before the actual work begins or before goods are delivered. It is not a demand for payment and is usually marked clearly as “Proforma Invoice.”
Proforma invoices are often used to:
Provide cost estimates
Get client approval
Clarify pricing before starting work
What a proforma invoice typically includes:
Estimated cost of services or products
Expected taxes
Validity period
Description of work or items
Purpose of a proforma invoice:
To inform the client of expected costs
To avoid misunderstandings
To help clients approve budgets in advance
In simple terms, a proforma invoice says:
“This is what the cost will likely be.”
Key Differences at a Glance
| Document | When It’s Used | Purpose |
|---|---|---|
| Invoice | After work is done | Request payment |
| Receipt | After payment is received | Confirm payment |
| Proforma Invoice | Before work starts | Provide cost estimate |
Common Mistakes People Make
Many freelancers and small businesses make these mistakes:
Sending a receipt instead of an invoice
Treating a proforma invoice as a final invoice
Asking for payment using a proforma invoice
Not issuing receipts after payment
These mistakes can confuse clients and affect financial records.
When Should You Use Each One?
Use an invoice when:
You have completed work
You want to request payment
You need a formal billing record
Use a receipt when:
Payment has already been made
The client asks for proof of payment
You are closing a transaction
Use a proforma invoice when:
A client asks for a cost estimate
You need approval before starting work
You want to clarify pricing in advance
Why Understanding the Difference Matters
Knowing the difference between these documents helps you:
Communicate clearly with clients
Maintain accurate financial records
Avoid disputes and confusion
Look professional and organized
Using the correct document at the right time improves trust and payment efficiency.
Simplifying the Process
Managing invoices, receipts, and estimates manually can lead to errors and inconsistencies. Using a structured invoicing tool helps ensure that documents are clear, professional, and correctly formatted.
GetSnapBill helps users create professional invoices easily, reducing confusion and saving time.