Invoices and receipts play critical roles in your business finances. Let’s take a look at the differences so that you’re better prepared to run your construction business.
Invoices are created to bill services that have been completed. Sometimes, a deposit is invoiced to a client to cover upfront costs prior to the start of work. Invoices are sent to whoever ordered the services with the expectation of payment by the due date noted on the invoice.
Businesses receive invoices from suppliers, vendors, and subcontractors with payment terms, such as net 30, which means payment is due 30 days from the invoice date.
Businesses send invoices to clients when certain milestones of the project are finished or at the completion of the job.
Invoices are a means of collecting payment meaning they naturally occur before receipts.
Receipts are sent after payment has been received as a confirmation of payment. Receipts also act as proof of payment.
Invoices and receipts should not be used interchangeably, as they are issued and received at different points. Receipts are a way to prove that services have been rendered and payment has been made.
Sometimes, instead of sending a separate receipt, invoices are simply marked as paid with payment information attached (such as a voided check, or credit card receipt).
Maintaining an accurate record of your invoices and receipts will make sure you get paid for work completed and prevent or help resolve future disputes. Without a clear paper trail, your business could be inaccurate in billing clients or making payments to contractors or vendors. Accurate record-keeping is essential to protect your business.
Invoices give you a look at your income before the client has submitted payment. These pending payments are called Accounts Receivable. Your business then will work on collecting payment for these invoices. Knowing when these invoices will be paid will give you insight into your business’s cash flow.
ConGenius is a revolutionary construction takeoff and estimating software that helps you estimate costs accurately so you can invoice accurately and increase the confidence your clients have in your billing process.
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