What Is the Difference Between a Bill vs. Invoice?

By Indeed Editorial Team

Published January 3, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Establishing payment obligations and tracking purchases are essential bookkeeping activities you can coordinate using invoices and bills. While a bill and an invoice may seem interchangeable, they have some differences. Understanding how a bill is different from an invoice can help you know when to create and use them for bookkeeping. In this article, we share the differences between a bill vs. invoice, describe other essential transaction documents, and answer frequently asked questions about creating bills and invoices.

Understanding a bill vs. invoice

To identify the differences between a bill vs. invoice, it can help to learn their definitions:

What is an invoice?

An invoice is a document outlining products sold and services delivered. It also shows the amount due for each item and the expected payment date. Depending on your agreement with a customer, an invoice may highlight their most recent payment. For example, if a company allows customers to pay for a product in monthly installments, you may include previous payments on each new invoice.

You can create a digital or physical copy of an invoice to keep as a reference. For example, it can help you resolve account disputes and support your payment claims. Invoices typically contain instructions for customers and many businesses issue them after selling a product or delivering a service.

What is a bill?

A bill is a document outlining the amount due for products sold or services delivered. It's written or printed evidence of a transaction. Businesses typically create bills every time a transaction occurs. For example, if a customer visits a restaurant where you work, you may generate a bill for the meal. Like invoices, companies typically issue bills before customers pay for products or services.

Differences between a bill and an invoice

Here's how a bill differs from an invoice:

Involved party

A bill and an invoice may refer to the same document, depending on who creates and receives it. For example, suppose you work as an accountant at a private school. You may send a student an invoice for a language course. The student receives the invoice as a bill and may pay the amount due. The school can then send a receipt stating that it received the student's payment for the course.

Expected payment duration

If they refer to separate documents, another difference between a bill and an invoice is when a customer can expect to pay the amount due. Invoices are typically for recurring payments at a future date. In comparison, a bill often necessitates prompt payments. For example, a company may write an invoice for a customer to pay the amount due in one week, at the latest. In comparison, a server that provides a bill to customers typically expects immediate payment.

Document details

Invoices are official business documents containing specific information, such as the date, unique invoice number, customer name, and contact professional. They may also contain information about goods and services tax (GST) and harmonized sales tax (HST). In comparison, bills often contain less information, focusing on the price and possible taxes. For example, if you get a haircut and receive a bill, it may not include your name, the payment due date, or a professional to contact for more information.

Other essential transaction documents

Aside from bills and invoices, here are other documents you may use depending on the transaction and your bookkeeping preferences:


In accounting, an estimate shows the approximate cost of a product or service. For example, a building contractor may estimate the total cost of constructing a shed based on their work experience and knowledge of building requirements. Because estimates can help in budgeting, customers typically request one. An estimate often contains a project's scope, timeline, and completion date.


A quote is a fixed price for a project. If a customer accepts your quote, it's important you complete the project following the details you provided. This makes it essential to conduct extensive research and organize meetings with customers to understand their expectations.

Sales receipt

A sales receipt is a document you receive from a company after paying for a product or service. It refers to payment evidence that may be necessary if you want to return a product or request service improvement. While some companies print this document, others write it on carbon copy paper to have a copy. A sales receipt often includes the business name, transaction date, items or services purchased, paid amount, and payment method. Manufacturers may also include business details on receipts, such as phone numbers and addresses.

Related: Examples of Acknowledging Receipt (With Four Steps)

Expense report

An expense report outlines purchases or service deliveries typically to request reimbursement. You can create one if you paid for a business product or service using your money. For example, suppose you had lunch with a client. You may create an expense report containing your meal's cost for your employers to reimburse you. Another example is paying for your travel ticket to attend a company event.


A statement shows the status of a customer's account. It may include sales transactions and credit payments. Many businesses periodically send statements to customers to keep them updated about their financial decisions. For example, banks may send account statements showing transactions completed within a month or year.

FAQs about bills and invoices

Here are answers to questions to help you gain more insights into creating a bill and an invoice:

What tips can help you create and manage invoices?

Here are helpful practices for preparing invoices:

  • Consider using accounting software financial programs with invoicing functionalities to simplify the creation process.

  • You can select a readable invoice format to ensure customers understand the details you include.

  • Consider reviewing the invoices you create to ensure they're accurate.

  • Aim to maintain consistency with your numbering system and product or service descriptions.

  • Consider creating a process for tracking, storing, and securing invoices.

  • Prepare for unpaid invoices by researching customers' payment histories and developing an invoicing system.

  • Consider following up with customers and checking that they understand the payment instructions.

Related: A Guide to Finance Skills: Definition and Examples

Who can create a bill or invoice?

Here are professionals who may be responsible for creating an invoice or bill in a company:

  • Bookkeeper: This professional maintains a company's financial record by receiving, recording, and handling cash, checks, and vouchers. They prepare company invoices and authorize payments after receiving invoices from vendors.

  • Billing clerk: This professional generates invoices and credit memos for distribution to customers. They typically enter invoices into an invoicing platform and handle billing inquiries from customers.

  • Sales representative: This professional sells, rents, or leases goods and services to customers in retail or business settings. They typically generate invoices or bills before accepting payments from customers.

Related: The Differences Between a Bookkeeper and an Accountant: A Review

Is an invoice a financial statement?

An invoice isn't a financial statement. Financial statements are records of company transactions within a period, typically a year. The most common financial statements are income statements, balance sheets, and cash flow statements. Financial statements include invoice details.

What are the different types of invoices?

Here's a list of invoice types you may create or receive:

  • Credit invoice: Businesses typically issue credit invoices if a customer requests a refund or access to products or services to pay later.

  • Debit invoice: This document shows the additional amount due for extra products or services. Companies may send debt invoices to adjust the details on existing invoices.

  • Mixed invoice: Businesses often use mixed invoices to combine credit and debit charges. For example, you may use this invoice type if a customer requests a product refund and requests additional services.

  • Interim invoice: This document requests payment from a client who agrees to terms that typically include installments or multiple payments. Using an interim invoice typically involves sending payment requests as the project progresses and the team completes milestones.

  • Commercial invoice: Companies issue commercial invoices for products they sell to customers internationally. Commercial invoices often include sales details and custom duties.

  • Timesheet invoice: Businesses typically use timesheet invoices to charge a standard rate based on the hours worked. Hourly employees, such as graphic designers and consultants, may also prepare this invoice type.

  • Pro forma invoice: This document is an estimate of a product's or service's cost before purchase or delivery. Businesses typically prepare pro forma invoices when working on large projects.

  • Final invoice: Companies can use final invoices to request payments for a completed project. This invoice type is typically for short-term projects with limited milestones.

  • Past due invoice: This document shows the initial payment requested and additional fees or interest charges. Companies generally create one if a customer is yet to pay by the due date listed on a final invoice.

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