Invoice vs. Bill: What’s the Difference?

Bakery owner sorting through paperwork and paying bills

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The words “invoice” and “bill” are often used interchangeably, but they have different meanings for buyers and sellers. Generally, businesses issue invoices to their customers or clients for goods and services rendered, which the latter treats as a bill (accounts payable). However, businesses can issue both bills and invoices to their clients. Invoices typically record recurring service-based purchases, whereas bills are issued for one-time purchases.

Key Takeaways

  • A business typically sends an invoice to a client or customer as a request for payment after it delivers a product or service.
  • When a business issues an invoice, clients typically have a certain amount of time to pay the amount due, whereas a bill represents a payment that is due immediately.
  • The terms “invoice” and “bill” have different meanings for buyers and sellers in the same transaction. When a business sends a client an invoice, the client treats it as a bill.

What Is an Invoice?

Invoices are commercial documents businesses issue to their clients to request payment for work by outlining the service provided and detailing the amount of money owed for the work.

Typically, a business sends an invoice to a customer after it delivers a product or service. However, depending on the terms of the agreement between both parties, an invoice can be issued after a certain project milestone or time period (e.g., once every two weeks for a long-term project). The invoice tells the buyer or client how much they owe and establishes payment terms for the transaction, helping ensure businesses receive the correct payment in full and on time.

An invoice should include the following components:

  • Date: The date is crucial information as it dictates when payment is due and the credit duration (how much time the client has to pay the amount due).
  • Unique ID number: This can include an employer identification number (EIN) issued by the IRS for tax purposes.
  • Invoice number: Invoice numbers should be sequential, especially for recurring invoices, to avoid duplication and payment disputes (e.g., 001, 002). 
  • Business contact information: Always include your name, address, phone number, and email address, along with your client’s information.
  • Description of goods and services: Enter every product or service you provide as a line item in your invoices. Include price and quantity for each line item. If applicable, include the date you completed the service and a description of the service. When invoicing for the sale of a product, note how many units your customer ordered, the rate per unit, the total number of units, and the total amount due. Don’t forget to add any applicable taxes to the total amount due.
  • Payment terms: Specify how much time the buyer has to pay for the purchase. The most common type of payment is Net 30, meaning payment is due within 30 days from when the invoice is received. However, you may choose to set invoice payment terms of up to three months, or Net 90, to give your customers more flexibility.


Depending on the nature of the project and your agreement with the client, you may elect to charge 50% of the total payment upfront or collect partial payments over time to cover the cost of the project.

What Is a Bill?

A bill is a statement of charges outlining the amount a customer owes for goods received or services rendered. The purpose of a bill is to serve as legal evidence for the buyer and seller that a sales transaction took place. Bills are usually used for one-time, upfront payments such as a retail purchase. Unlike an invoice, billing is a method for requesting immediate payment.

Common examples include billing done at restaurants, salons, and retail stores. While invoices include detailed client information, a bill doesn’t necessarily need to include this. The bill generally should include all of the same components as an invoice, including:

  • An itemized list of goods and services provided
  • The total number of units purchased
  • The total amount due plus any applicable taxes


When a business sends an invoice, a customer or client inputs the invoice information in the form of a bill (or accounts payable) in their general ledger.

Invoice vs. Bill: What’s the Difference?

An invoice is generated by the business providing a service and the customer receiving the invoice records it as a bill to be paid. From a business’s perspective, an invoice is sent while a bill is received.

The table below provides a visual comparison between an invoice and bill. 

Invoice Bill
Payment is due within an agreed-upon time frame (typically 30-90 days after an invoice is issued). Payment is due upon receipt.
Invoices are intended for long-term, recurring purchases and are usually issued upon delivery of a product or service.  Bills are intended for one-time purchases and are typically issued prior to the delivery of a product or service.
Invoices are issued for sales provided on credit. Bills are issued for transactions that are completed in one go.

It’s important for business owners to know the difference between a bill and an invoice in order to receive payments faster, manage cash flow, and reduce the stress of collecting payments.

Frequently Asked Questions (FAQs)

Is an invoice a financial statement?

No. A financial statement is a record of all transactions within a fiscal period, including the income statement, balance sheet, and cash flow statement. Invoices are recorded in the financial statement as accounts receivable.

Is a receipt a billing statement?

A receipt is issued as proof of payment after payment has been received, whereas a bill represents outstanding charges that must be paid immediately. Businesses issue receipts to show a bill has been paid.

What is the difference between a statement and a bill?

A statement itemizes invoices that have not been paid by the buyer or client, whereas a bill represents a single payment that is due. When a bill is received, the client treats this as accounts payable, but they do not record an accounting transaction when a statement is received because it is purely informational in nature.

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  1. "Invoicing and Taking Payment From Customers."

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