Whether an invoice is same as a bill is something many business owners and companies are confused about. Invoice and bill are not synonymous terms, and are not even interchangeable. However, the difference between bill and invoice is not a night and day difference. Bills and invoices are generally documents that somewhat convey a similar information. Still, they are not the same.
When you are generating an invoice, it is more like a request of payment for the services that you provided to your client. The same transaction when viewed by your client will be looked upon as a bill. The bill to invoice meaning finds its roots at the client’s end. So, it is all about perspective.
Let’s dive in and take a deeper look into the difference between invoice and billing statement. Also, find out how invoicing software and billing software function.
Bill and Invoice definition
Let’s start with the basics.
Now that you have a general idea of both bills and invoices, let’s look at what they exactly are.
What is a bill?
A bill is a transactional document produced by the consumer for personal records as an informational account of what they need to pay.
It is generated or issued before making out the payment for the services. The consumer uses the said bill as a matter of their record. And a bill is generated after receiving an invoice for the services or products the consumer consumed.
Bills generally act as a reminder for the consumer or client for what they owe to a client.
What is an invoice?
An invoice is a transactional document produced by a business towards a client requesting payment for the listed services they provided.
An invoice is generated post the completion of services or on a recurring basis as per the contract. An invoice generated before providing services is known as an estimate.
Invoices outline the exact nature of services, the due date for payment and banking information as a means of requesting payment. It is produced by the business and sent out to the client. It is maintained in the record of the business.
Difference between Invoice and Billing Statement
So, it should be clear by now that the difference between bill and invoice is more to do with perspective than anything else. An invoice will be produced at the business’ end to convey information about services provided, due date etc.
An invoice is received by the consumer or client as a bill. A consumer might also regenerate the bill using this invoice to serve their operations appropriately. This means they will change the format. Basically, the difference between bill and invoice is simply about who you are in the transaction.
And remember that a receipt is issued post payment, as a proof of payment, by the business towards the client.
Invoicing Software and Billing software
Surprisingly, both invoicing software and billing software pretty much mean the same thing. Such software manages invoices and bills, and many more things involved in a business transaction.
Any business will act as a provider and a consumer during different transactions. So, any invoicing software or billing software will manage and create outgoing invoices and incoming bills as well.
These software solutions take into consideration the various elements of multiple things, and only in the context of such software can the terms “billing” and “invoicing” be used interchangeably. This is because any invoicing software will include billing nuances as well. I.e., it will automatically send out an invoice to the client which will be looked upon as a bill from the client’s side.
Further, such software will accept payments on the generated invoice, from the client’s side, where the same invoice will be looked upon as a bill.
So, now you know the subtle difference between a bill and an invoice, which will hopefully help you operate your business more efficiently.