Invoice vs. Bill – What’s The Difference?

person calculating costs of bills and invoices

Last Updated November 30, 2023

Often, you’ll hear the terms “invoice” and “bill” used interchangeably, and you won’t think twice. But depending on who you ask, you may get slightly different definitions of an invoice vs. a bill, potentially leading to even the most experienced accountants dealing with confusion when balancing the books.

On their own, terms such as invoice, bill, and receipt might be simple to understand, but because terms like invoicing and billing are sometimes used synonymously, it can make life difficult for business owners new to handling accounting responsibilities.

To help avoid any confusion about an invoice vs. bill, we answered the following questions: what is an invoice, what is a bill, and how is invoicing and billing different from one another?

What Is An Invoice?

An invoice is an itemized document sent from the seller to the buyer following a B2B or B2C sale. Invoices detail the goods or services provided, request payment for the goods or services, and act as a recordkeeping document.

While customers must fulfill their obligations and pay invoices in full, invoice payment is often not required immediately. Rather, pre-defined invoice payment terms determine when the buyer must pay. This will be important later on once we discuss the difference between an invoice and a bill.

What Is the Purpose of an Invoice?

An invoice serves two clear purposes:

  • To provide record of a transaction (the invoice number serves as the official record-keeper)
  • To collect payment for the services or goods rendered

Invoices are a staple of accounting. Every business owner should know what belongs on an invoice, such as invoice number, date of issue, a description of services provided, and payment terms. Business owners should go one step further by learning the ins and outs of invoice payment terms, as setting sensible terms depending on your business’ working capital needs can affect cash flow for both the seller and the buyer.

Additionally, learning how to write an invoice is as important as knowing what belongs on an invoice. By laying out your invoice in a detailed and clear format, perhaps with the help of an invoice template, you will ensure your business looks professional in the eyes of your customer.

What Information Belongs on an Invoice?

Every invoice should include the following:

  • Seller information (business name, address, phone number)
  • Customer information (business name, address, phone number)
  • Amount owed in an itemized list
  • Description of goods sold or services rendered
  • Payment terms and conditions
  • Invoice issue date and invoice due date

Invoices can have slight variations in layout, but they should all contain the same type of information.

What are the Different Types of Invoices?

There are many different types of invoices, and you will find that which type of invoice you use is dependent on the type of industry, due date, or stage of the project.

Some of the most common types of invoices you’ll find include:

Pro Forma Invoice: A pro forma invoice acts as an estimation invoice, notifying the customer how much the project will likely cost. Sellers send customers pro forma invoices before any services are rendered or goods are provided.

Pro forma invoices are often revised mid-project or upon completion, as it’s not uncommon for those estimations to change due to factors such as more or less hours worked on a project than expected.

Sales Invoice: What one might consider a “standard” invoice, a sales invoice is any document requesting payment for a product or service.

Overdue Invoice: An invoice becomes an overdue invoice once the due date has passed without customer payment. Unfortunately, overdue invoices are far more common than you might think.

Debit Memo: A debit memo, also known as a debit note, is not a sales invoice but rather a memo created for when adjustments need to be made to the initial sales invoice, usually to collect outstanding debt from the buyer.

Expense Report: An expense report – a document created by an employee who needs reimbursement for business-related expenses – is considered a type of invoice. For example, sales professionals regularly create expense reports to be reimbursed for costs such as gas money, lodging, and food and drink.

What Is A Bill?

Like an invoice, a bill provides documentation of a transaction, summarizes goods or products sold, and details how much a customer owes. However, a bill is more of a generic term and can be used to refer to various documents, not just invoices. While some people might refer to an invoice as a bill, know that a bill is not the same as an invoice.

A bill is an itemized document requesting immediate payment. Bills can include phone bills, auto bills, and utility bills, and more. For example, as a restaurant-goer, you are expected to pay immediately upon finishing your meal, thus you are billed, not invoiced. Once you pay the bill, you are issued a receipt. For more details on the difference between a receipt and an invoice, check out our article.

What Information Is Included On a Bill?

A bill typically has the falling information:

  • Seller information (business name, address, phone number)
  • Billing number
  • Date of transaction
  • Total amount charged

As you can see, the information you’ll find on a bill is similar to what you’d find on an invoice, although you usually won’t find customer information on a bill.

Invoice vs. Bill: Similarities and Differences

Let’s take a look at some of the similarities and differences between an invoice vs. a bill.

According to Ian Wright, managing director of, “Invoices and bills hold much of the same information and are often referred to as either name. They both are produced before a payment is made (as opposed to a receipt which is after.)”

While both terms pertain to similar itemized documents, business owners should not use the terms interchangeably, to avoid confusion.

Take a look at the table below to better understand some of the similarities and differences between an invoice and a bill:

Invoice vs. Bill: Similarities Invoice vs. Bill: Differences
Both include much of the same information and outline similar details regarding a given B2B or B2C sale. An invoice provides more of an in-depth description of goods or services provided, while a bill simply lists the product with the price. A bill also does not typically list customer information.
Both are itemized documents requesting payment that are beneficial for recordkeeping. A buyer is expected to owe payment immediately upon being billed. When invoiced, a customer owes payment according to invoice payment terms, which can be days, weeks, or months later.
Both an invoice and a bill contain a unique number (invoice number and bill number). Some invoices can be perceived as bills (for example, when payment is due upon receipt), but all bills are not invoices. Bills that are not invoices include phone bills, utility bills, and auto bills.

Another thing to keep in mind when considering the differences between an invoice and a bill is how you perceive the document when sending or receiving it.

“From a business or seller’s point of view, you would create an invoice to send to the customer which is a request for payment,” Wright said. “It shows you have committed to, or already have provided the service or product. For a customer or buyer, they would often refer to the document as a bill, as it is a summons for money / money owed and due to be paid.”

For example, as a sender, you would perceive the document as an invoice for the services rendered, but as the receiver, you would record the document as a bill that needs to be paid.

Invoice vs. Bill FAQs

Is an invoice a bill?

In the business world, you might find people who use invoice and bill synonymously, but it’s important to know that there are differences between these documents.

Both an invoice and a bill include much of the same information, including seller information, buyer information, description of goods or services, and the total amount owed. However, a bill is sent to customers who owe payment immediately, whereas an invoice is issued to a customer who owes payment but potentially not for days, weeks, or even months, depending on the payment terms. Additionally, invoices typically provide a more in-depth description of goods or services purchased, while a bill is much less detailed.

What does “bill to” mean on an invoice?

“Bill to” refers to the individual at a company who should receive the invoice. Including a “bill to” section helps route the invoice to the person who is responsible for payment.

What is the difference between payment vs. billing?

To better understand the difference between payment vs. billing, try to analyze the terms as two separate processes, even though they are closely related.

Billing encompasses tasks such as sending invoices and tracking customer payments. Payment, or payment processing, is the precise stage where the money is deposited into an account and processed for payment.