What to include on a receipt of payment? | DocuSign
What is a receipt of payment, and why is it important?
A payment receipt is issued to a customer who needs proof of their payment on an invoice for a service or product. A receipt of payment provides evidence that a transaction has occurred between a business and a customer, and it outlines the terms of the sale.
Whatever the size of your business, you need to provide a payment receipt to your customer. Creating a payment receipt is important because it acknowledges that a part or full payment has been received:
- Receipt of payment documents are essential to track and record transactions through an organisation and can help document accurate financial records for accounting purposes and to manage cash flow.
- They can also offer protection for customers and organisations, which can help avoid discrepancies or disagreements regarding what has been paid.
- For businesses, providing proof of payment to customers enhances trust and credibility.
- Payment receipts are sometimes required for larger purchases, as they can serve as evidence in warranty claims or disputes.
What Should be included on a Payment Receipt?
It can be beneficial to set up a template in your business to provide regular payment receipts to your customers. Here’s a guide to what needs to be included on a payment receipt:
- Title: Mark the document as a payment receipt
- Business Name and Contact Information: Clearly state the name of the business, its address, and contact details.
- Payment Date: Specify the exact date the payment was received. This is important for accurate record-keeping and to provide a transaction timeline.
- Amount Received: Clearly mention the total amount of money that was paid. This figure should be accurate and match the payment made.
- Amount Due: If the payment is partial or only covers a portion of the total amount due, indicate the remaining balance that the customer still owes.
You may also include who made the payment. Each payment receipt will vary slightly but will consist of the above categories. Find out more about setting up a template for a receipt of payment with DocuSign eSignature.
Are Sales Receipts and Payment Receipts the same?
No. Payment receipts give basic details about the sale, while sales receipts are more detailed and include information about the products, taxes, and the time and date of purchase.
Unlike a sales receipt, a payment receipt doesn't delve into the specifics of the items purchased. A payment receipt also acts as proof of payment, whereas a sales receipt may only confirm the sale and not the payment. A payment receipt acknowledges the receipt of money and specifies the payment method, date, and amount.
Distinguishing Invoices from Payment Receipts
In the UK, an invoice is not the same as a receipt, which is an acknowledgement of payment. An invoice and a payment receipt are distinct documents, each serving a unique purpose in the sales process.
If you sell a customer a product or a service, you must give them an invoice by law if you and the customer are registered for VAT (a business-to-business transaction). An invoice is a formal request for payment issued by a business to a customer.
It outlines the purchase details, including the products or services, quantities, prices, and payment terms.
A payment receipt, on the other hand, is issued after the payment has been made, confirming the completion of the transaction. In essence, an invoice initiates the sales process, while a payment receipt concludes it.
In summary, the receipt of payment is a crucial document that can help create trust between a company and its customers. It’s not always mandatory, but accountants would highly recommend that you provide a payment receipt for the benefit of all parties involved. Do you want to set up a template for a receipt of payment?