Invoice vs receipt vs purchase order: which document to send

The simplest way to keep these straight is to place them on the timeline of a single sale.

1. Purchase order — the buyer commits:

Created by the buyer, before anything is delivered. It states what they are ordering, at what price, in what quantity, and often on what terms. It is the buyer's authorisation to spend, and once you accept it, it usually forms part of the agreement between you.

The important consequence for a seller: if a client issues purchase orders, your invoice must quote the PO number. Without it, their accounts payable system has nothing to match your invoice against, and the invoice will sit unpaid regardless of how clearly your payment terms are written.

2. Delivery note — the goods arrive:

Accompanies a physical shipment and lists what is in the box. It usually shows quantities but no prices. Its job is to let the receiving party confirm they got what was ordered, and it becomes the evidence in any later dispute about a short delivery.

3. Invoice — the seller requests payment:

Created by the seller, after the agreed billing trigger. It states the amount owed, the due date, how to pay, and what reference to use. It creates a receivable in your accounts and a payable in the client's.

4. Receipt — the payment is confirmed:

Created by the seller, after money has been received. It proves payment happened. The distinction matters: an invoice proves you asked, a receipt proves they paid. Clients need receipts for expense claims, warranty support and their own bookkeeping.

5. Statement of account — the period is summarised:

A periodic summary of everything on a client's account: invoices raised, credits applied, payments received, closing balance. It is a reconciliation tool, not a payment demand. Sending a statement instead of an invoice is a common and costly mistake, because most accounts payable systems will not pay against one.

Bill and invoice describe the same document from opposite ends. You issue an invoice; your client receives it and records it as a bill to pay. Accounting software often reflects this directly, using "invoices" for money coming in and "bills" for money going out.

There is a soft distinction in everyday language: a bill tends to imply immediate payment, as in a restaurant or a utility, while an invoice implies terms and a future due date. It is not a distinction worth arguing about with a client. If they ask for a bill, send your invoice.

Invoice vs proforma invoice:

A proforma looks like an invoice but is issued before the billing trigger and does not create a receivable. It is used for deposits, internal approvals, and customs. If you have been sending real invoices so clients can raise purchase orders, you should be sending proformas instead.

Invoice vs quote:

A quote is an offer the client can accept or decline. An invoice is a request for payment on work already triggered. Sending an invoice when the client expected a quote reads as presumptuous and often damages the relationship more than the billing error itself.

Receipt vs paid invoice:

Marking an invoice PAID, with the date and method received, generally works as a receipt for business clients. Consumers and expense-claim processes sometimes require a distinct receipt document. When in doubt, sending a short standalone receipt costs nothing.

Before you send anything, ask what the recipient needs to do with it. Approve a spend? Purchase order. Release a payment? Invoice with a PO reference. Claim an expense? Receipt. Reconcile a quarter? Statement. Decide whether to hire you? Quote. The document follows from the action, not the other way round.