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What’s the Difference Between a Bill and an Invoice?

What’s the Difference Between a Bill and an Invoice?

Jun 01 2017

The words “bill” and “invoice” are often used interchangeably across industries and in conversation. Though not a major crime against the language (they’re swapped with such frequency, it’s unlikely a misunderstanding would occur), it’s worth noting the differences. The two are related, but they’re not twins.

Bill: What we most commonly refer to as a bill is a balance forward, business-to-customer document. It’s a request for payment with the expectation that the payment will be made by a specific date. If it’s a recurring bill, any missed payment will appear in the next bill. For example, if you don’t pay March’s bill, April’s bill will reflect the balance from March, what’s due in April and any penalty or interest that has accrued. A bill carries over, and it also makes a demand: Pay now.

Invoice: An invoice is an itemized list of goods or services with individual costs and a total sum, typically used in business-to-business transactions. An invoice can be sent before or after a payment, which is why it acts more as a record of a transaction rather than an immediate request for payment. (If the invoice is sent prior to payment, it will often say something like, “Pay within 30 days.”) An invoice is also a static document, meaning it doesn’t show the previous balance due or payment history.

Statement: That’s right, a bonus word. A statement is essentially a status document indicating where an account stands within a particular time frame–you’re all paid up, you owe x amount, etc. It’s not a request for payment, though the word is often used like it is.

And one last language note: Another reason these words are used interchangeably is a matter of tone. In short, getting an invoice or a statement sounds nicer than getting a bill.