In short, one is requesting payment while the other is proof of payment. Apart from the major difference in purpose An invoice is issued to request payment while the receipt is issued stating that payment has been made, there are quite subtle differences between both the legal documents. For example, if you’re a retailer using a Magento Purchase Order system or a Magento ERP system, you can create a PO automatically right from your system and send it to the supplier. A receipt is issued after payment is made. The seller can create the invoices right on their system from the PO they stored in the system. Nowadays, buyers can generate a PO via the seller’s available purchase order system or they can do it on their own system and send it via email automatically to the seller. Both entities can use the PO to track and manage the procurement process. If the seller accepts the PO, it will become a legally binding document. Sellers use invoices to track accounts receivable, while buyers use purchase orders to track accounts payable.

The purchase order acts as a contract that specifies the details behind the sale, while the invoice is a confirmation of the sale going through. As against, the receipt highlights the actual amount paid by the customer, along with the date on which the amount is paid. Due on receipt is a payment term that is often used when the work has. Essentially, the client is expected to pay the invoice as soon as possible, and ideally, within a few days of receiving it. The invoice intimates to the client the total amount due for payment and the due date for payment. When an invoice says due on receipt, it means that payment is expected immediately after the client receives the invoice. The buyer will send these types of PO to the seller for confirmation. While the uses for these documents vary, so does the purpose of each. Conversely, a receipt is proof of the transaction.

A purchase order (also called a PO) is an official document prepared by the buyer with a list of products or services, quantities, and price that they want to purchase from the seller.

Define invoice vs receipt