These are common questions that we get A LOT.
– What is the difference between an invoice vs. sales receipt?
– When should I use an invoice vs. sales receipt?
– Why is this money I got from my customer showing up in my QuickBooks twice?
They are all very good questions.
An invoice is what you send to one of your customers when they OWE you money or when you want to apply multiple payments for a single product or service that you sold to them.
1. If you give a massage today, and your client forgot their wallet. You can say, “That’s OK, I’ll send you an invoice.” They get the invoice, and they pay you later. OR
2. Say it’s a medical massage, and a portion of it is going to be covered by the client’s insurance. You can invoice the client in your QuickBooks, collect their co-pay as payment against that invoice, bill their insurance company, collect that payment against the same invoice, and then let the client know how much they still owe if the insurance company did not pay the full amount of the service.
The main point is that in order to show that you have gotten money from your client, you need to enter both the INVOICE and the PAYMENT into your bookkeeping system. If you do not enter the payment, then your system will show that the client owes you money.
A sales receipt is what you create when your client is paying for the full amount of the service AT THE TIME OF SERVICE.
1. When you go to the grocery store, they don’t bill you later. You get your groceries, pay for them, and they hand you a receipt. All done.
2. Back to our massage example, if your client gets a massage and they pay for it right then and there, it’s all tied up with a nice, little bow.
A SALES RECEIPT is like entering both the invoice and payment in a single transaction. No money is owed when the transaction is complete.
“So what if I screwed up and entered both?”
This happens all the time. Someone will enter an invoice instead of a sales receipt for a product or service that their customer is purchasing. Then, when the customer pays them, they go in and enter a sales receipt showing that the money has been received. OOPS! This is a no-no. Now you have shown that your customer paid you for the product/service, but your system also shows that they still owe you money. You have duplicated the sale in your books, and either the unpaid invoice or the sales receipt should be deleted.
“So which do I delete?”
You CAN do either, but for truly correct accounting, delete the Sales Receipt. Technically the sale should be recorded for the date that the services were rendered or the products were given to the customer. The payment should be recorded with the date that you received the money from the customer. If these transactions didn’t happen on the same day, then it would be better to have the Invoice & Payment combo than the sales receipt.