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    Is An Invoice A Bill? What Is The Difference?

    invoices vs bills

    An invoice and a bill are very similar and contain almost the same information. Both include an itemized list of the services or goods exchanged between suppliers and vendors—the difference between the two lies in their usage. 

    The term invoice is used by vendors who use this document to notify clients of the requested payment. The term bill is used by customers when talking about the amount that they owe to a vendor. Keep reading to explore these nuances in greater detail.

    Invoice Definition

    Invoices are issued by businesses to their clients specifying the cost of services or goods supplied. It typically involves a breakdown of these services and other relevant information, such as due date, payment method, terms, and conditions.

    We think of an invoice as not only a transaction requesting payments from clients but further as a record of that transaction. You can manually create invoices or generate them using invoicing software.  

    Bill Definition

    So, is an invoice a bill? Not exactly. Like invoices, bills are also transactional documents, but these outline the amount a customer owes its vendor for using their products or services. We generally think of these documents as a statement of charges.

    Bills are:

    • Issued before payments
    • Often cleared on the spot, but can also act as binding documents or records reminding customers of the amount that they owe and the deadline for handling payment
    • Invoices that customers receive from vendors go into the account ledgers of the latter as bills that must be cleared promptly

    What’s The Difference Between An Invoice And A Bill?

    The difference between an invoice and bill is very subtle and can be boiled down to which entity is issuing the document. Both documents specify the same information regarding the exchange of products and services along with the associated costs. To better understand this exchange of invoices and bills, consider the following example.

    After supplying services to a client, a business issues an invoice. The client then accepts this invoice as the bill for services delivered and makes the payment. After that, the business provides the customer with a receipt or proof of payment that records the transaction’s completion.  

    A bill can vary from an invoice in other ways too. Typically, invoices are more documentation-specific. They stipulate a lot more information to ensure a smooth reconciliation on the part of the customer. For these reasons, the more favorable document depends on the situation. The following table briefly illustrates the ideal cases for invoices vs bills.  



    Used for on-the-spot transactions

    Used to make payment requests

    Used only once

    Can reoccur

    Services or goods are received by customers or clients instantaneously

    Services or goods are pre-ordered and arrive on a specified date

    Information is mostly limited

    Heavily documentation-orientated 

    Contains: invoice number, issuing date, due date, the contact information of both the vendor and the client, service/goods description, cost of goods, total amount due

    Reserved by the customer as proof of payment

    Used by the vendors for record-keeping, taxation, and accounting

    Billing usually takes place at department stores, restaurants, shopping malls, etc.

    Invoices are used by businesses to record business revenue, predict sales, request customers for payment within due date, keeping track of sales and inventory

    What’s The Difference Between An Invoice And An Estimate?

    An invoice and estimate serve two very different purposes despite looking the same and containing similar information. While the former contains the breakdown of services or goods already sold with the primary purpose of seeking payment, sending estimate costs takes place before any work begins. 

    You can think of an estimate as a proposal that markets the complete services a business offers and the costs. In case you’re curious, here’s how to create estimated costs. The document specifies:

    • An outline of the business’ products or services
    • The scope of the project so that the client may know what to expect
    • Timelines and milestones that will be completed for the project
    • Cost estimation for the benefit of the client
    • Terms and conditions, both general and specific, that apply to the task at hand