Invoice vs. Sales Receipt

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.


Photo Credit - DG EMPL

Photo Credit – DG EMPL

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.

For example:

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.

Photo Credit- Rhino Neal

Photo Credit- Rhino Neal

For example:

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.

Thanks for the great questions!  Keep sending your bookkeeping inquiries to us on Facebook, Penny’s Corner, or by email!

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Comments 6

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  3. Thank you for writing this blog and for your videos. They have been super helpful. I have a question that I know many others are asking online. My customers pay before they get my product, however since I am using a payment processor it takes a few days for the funds to be deposited into my account. Would I use a invoice or sales receipt to record this. If I uses a sale receipt how would I show that the funds were not yet deposited into my account? Thanks you.

    1. Great question, Nicole! You would use a sales receipt, and be sure to point the money to the “undeposited funds” account rather than putting it directly to your bank account. This solves two issues:
      1. It makes it so that you can record the funds going into your account when that deposit actually happens.
      2. It allows you to batch the individual payments into the full amount of the deposit from your payment processor.
      You can learn a bit more about this in our video about making deposits:
      Thanks again for your awesome question!

      1. Thanks your response was very helpful. I should have further clarified in my question. What if I want to enter a whole days or weeks worth of sales on one sales receipt to save time? (I have lots of sales per day but can’t afford an app that transfers my data from my payment processor to QBO). This means that I will need to match the one receipt to multiple bank deposits, and sometime a bit of money from Day 1 sales receipts and Day 2 sales receipts will be on the same bank deposit. I would need a way that would allow me to deduct the payment processing fees from the sales receipts. Would this be possible? Would I still use sales receipts?

        1. Hey Nicole,
          Oooh! Now you’re tickling my nerd bone. That’s a really good question, and a more common scenario than people imagine. There are a lot of small retailers and online stores that save time by doing what you’re doing.
          In the case of recording multiple sales on a single transaction, you would definitely need to use an invoice because you are applying multiple payments (particularly with different payment methods or payments on different dates) to that single invoice.
          Similar to the sales receipts, you want to make sure that you are pointing the payments to Undeposited Funds, rather than directly to the bank. By doing this, you can apply the full amount that you received from your customer’s credit card to the invoice, recording that all funds were collected from the customer.
          Later, when you enter your deposit from your merchant service provider, you can adjust out merchant fees deducted from the deposit. You do not want to enter the merchant fees as a deduction from the invoice or payment.
          Great job, and thanks again for the awesome questions!

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