What’s the Difference Between an Invoice and Sales Receipt in QuickBooks Online? Which Should I Use?


If you use QuickBooks Online to handle your company’s finances, you will have the option to create invoices and sales receipts. Many people think these terms are interchangeable, but there are actually some important differences.

What Is an Invoice?

You can create an invoice if a customer is not expected to pay in full when a service is rendered or when a product is provided. An invoice will allow a customer to pay the balance later. When payment is received, you will be able to deposit the money into your account. You will also have to enter the payment in QuickBooks Online.

When you create an invoice, you will be able to specify when payment is expected. If the customer doesn’t pay by that date, the invoice will be considered overdue.

If a customer makes a series of payments with different payment methods, such as credit card, check, and cash, invoices will help you keep track of them all. Each payment made toward a balance due will be counted as an adjustment.

QuickBooks Online makes it easy to gather information on invoices and use it to compile reports on specific products and services. QuickBooks Online can also separate information on invoices with outstanding balances and compile that data in a list. 

What Is a Sales Receipt?

A sales receipt is generated when a customer receives a product or service and pays the entire balance due immediately. This is known as a point-of-sale transaction. To keep track of sales receipts in QuickBooks Online, all you have to do is enter information on the sale, and the funds that were collected will be deposited into an account. 

A sales receipt gives a customer a description of what was purchased and proof of payment and also records the revenue so it can be counted in your income. Multiple payments from different customers can be included in Undeposited Funds and tracked later to help when it’s time to reconcile monthly bank statements.

Should You Use Invoices or Sales Receipts?

When you process a transaction, you will generate an invoice or a sales receipt, not both. An invoice will work well if you don’t expect to be paid in full all at once. If you create an estimate or purchase order, you can quickly convert it to an invoice. A sales receipt will be a better choice if you run a business that expects to receive full payment when products are provided or when services are rendered. Whether you use invoices or sales receipts, QuickBooks Online can help you generate separate reports on sales taxes owed.

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