How to Write a Receipt of Payment

Receipts have been at the heart of commerce since ancient Mesopotamia. And as is often the case, the more things change, the more they stay the same. From clay tablets to pen and paper to PDF attachments – receipts remain a must-have for businesses of all sizes.

In this article, we’ll cover everything you need to know about receipts, including what it is, how to make one, when to issue them, and much more. So, without further ado, let’s get started with the first question on everyone’s mind.

Key Takeaways

• Essential Information: Include the date, receipt number, seller and buyer details, item description, total amount, and taxes to ensure clear documentation.
• Format Options: Receipts can be handwritten, printed, or digital. Digital receipts are gaining popularity for their convenience and eco-friendliness.
• Legal Importance: Receipts provide proof of purchase, crucial for returns, disputes, and tax records, ensuring accurate financial documentation.
• Customization: Enhance receipts with branding, terms, and refund policies to improve professionalism and manage customer expectations.

What Is a Receipt?

Simply put, a receipt is proof of purchase issued by a business to a buyer following a successful transaction. Depending on what, where, and how an item or service was bought, this can be done digitally or in paper format. Consequently, there is no specific standard set for receipt contents and style.

Invoice vs. Receipt: What’s the Difference?

Although invoices and receipts may look like similar documents due to the information both need to include, there are three main significant distinctions between the two. 

Explore the key differences between invoices and receipts.

These include:

• Purpose:
  Invoices request payment for items delivered or services rendered.
  Receipts acknowledge the finalized payment for items or services.
• Time of Issue:
  Invoices are issued after fulfillment of an order but prior to payment.
  Receipts are issued after fulfillment and successful payment.
• Usage:
  Invoices are used as a record of sales and a way to track inventory.
  Receipts are used as proof of purchase and for business accounting.

Did You Know:
A signed and dated invoice following its payment can act as a simple invoice.

When Do I Need to Issue a Receipt?

As a best practice, you should always issue a receipt to your customers whenever they buy something from you. Naturally, this doesn’t have to be done per item but rather per purchase.

Why Do I Need to Issue a Receipt?

There are three main reasons why issuing receipts is a vital part of any business’ financial operations. These include:

• Financial Statements: Keeping accurate records of your business activities helps track your growth and cash flow and understand your current situation.
• Tax Returns: Like invoices, receipts can be used during tax season to submit accurate information, request pay-backs (if eligible), and prevent litigation.
• Business Decisions: Using historical information contained in receipts can help you better predict future trends and prepare with data-driven decisions.

What Information Do I Have to Include on a Receipt?

As we mentioned in a previous section, there’s no such thing as a single legal receipt format. However, there are several pieces of information you should include on your receipts to ensure they fulfill their record-keeping and proof-of-ownership purposes.

1. Header: Should clearly display the word “Receipt” to identify the document.
2. Date and Time: Tracks when a transaction occurred for record-keeping.
3. Business Information: Includes name, address, and contact of the seller, as well as any additional branding elements.
4. Transaction Number: A unique transaction/receipt number for tracking.
5. Customer Information: Some receipts might include the customer’s name or contact details, especially for service-based or large transactions.
6. Itemization of Products or Services: A detailed list of everything purchased, including individual prices. May include a brief description or SKU number.
7. Quantities: The quantity of each item or service provided.
8. Prices and Rates: The cost of each item or service, with the rate applied.
9. Subtotal: The total cost before taxes, discounts, or additional charges.
10. Taxes and Additional Charges: Clearly stated taxes, service charges, or other additional fees applied to the transaction.
11. Total Amount Paid: The final amount paid by the customer, including all taxes and charges.
12. Payment Method: Indication of how the payment was made (e.g., cash, credit card, debit card, online payment).
13. Return Policy or Other Relevant Information: Information on return or refund policies, warranties, or other relevant business policies.
14. Signature or Acknowledgement: Some receipts may include a signature line for the customer or a statement acknowledging the receipt of the payment.
15. Thank You Note or Business Slogan: A brief, courteous thank you message or a business slogan, often included as a gesture of customer appreciation.

Tax Considerations for Receipts

Receipts, like many other financial documents you’ll come into contact with throughout your business operations, are subject to taxes. Therefore, there are several considerations you should take into account when issuing and reporting taxes based on your receipts.

These include:

• Income Reporting for Self-Employed: In the US, UK, NZ, and AU, self-employed individuals must report all income earned, including one coming from their receipts.
• Tax Deductions for Self-Employed: In the US, UK, NZ, and AU, self-employed individuals can deduct relevant business expenses from creating receipts, such as supplies, equipment, and home office expenses.
• Tax Compliance & Standards for Companies: In the US, UK, NZ, and AU, companies must adhere to their local “Generally Accepted Accounting Practices” (GAAP).
• VAT/GST: In the UK, AU, and NZ, Value-Added Tax or Goods and Services Tax may apply to sales, and businesses are responsible for collecting and remitting these taxes to the respective tax authorities.
• Sales Tax: In the US, sales tax may apply depending on the state and local jurisdiction. Businesses must collect and remit sales tax on applicable sales, which may include receipts.
• Currency and Exchange Rates: International businesses must consider currency exchange rates when reporting income received from receipts in different currencies.

Common Types of Receipts

Thanks to the wide use of receipts across all industries and types of businesses, there’s a near-infinite amount of possibilities for receipt formats. So, instead of naming them all, you’ll find the most common receipt examples below.

How to Write a Receipt?

So you need to make a receipt of payment – no biggie. There are several ways you can do so. However, each comes with its own benefits and downsides, so you should be careful when choosing the method that works best for you. Below, we’ll discuss the approaches you can take when you hear someone say, “I need a receipt”.

Manually Writing a Receipt

If your business doesn’t issue too many receipts, you can always go old-school and opt for the classic pen and paper. The advantages of this approach include not needing a printer on-premises or an online service subscription. However, it can quickly become overwhelming if you need to fill out multiple receipts in a day.

If you decide to issue your receipts by hand, we wholeheartedly recommend you print out an online receipt template beforehand or purchase a receipt book. Both of these will streamline the filling out process, as they feature pre-printed titles for necessary information, such as business information, list of items, and price.

Using Online Receipt Templates

As digital tools become increasingly present in all areas of life, many businesses switch from manually writing receipts to issuing them electronically, which is faster and more convenient. For example, even many modern cash registers offer programmable options for printing out receipts in a brick-and-mortar store.

At the same time, ecologically conscious business owners are now turning to free receipt templates they can distribute digitally. These templates offer a wide range of advantages, like being available in various formats (PDF, Word, Excel, etc.) and styles to suit their unique branding while being completely free and easy to edit. 

All you have to do to make a receipt is find a template you like, click download, and get right into customizing it to your specific needs. 

Using an Online Receipt Generator

But if you really want to go the extra mile in terms of receipt template customization or just intend on issuing a large quantity of high-quality receipts, you should certainly check out an Online Receipt Generator. 

Like our templates, it’s completely free. However, it offers several additional benefits, such as the ability to tailor your documents fully without opening another document editor. All you have to do is fill in the necessary information, choose your preferred style, add any necessary branding, and click download.

Use Billdu and Don’t Worry About It

Every approach to making receipts we’ve discussed so far has its merits. But how does the possibility of creating all your documents in a single interface, even on the move, sound? If that’s something you’d be interested in, then you should definitely give Billdu a look. 

Billdu is the best-rated invoicing app for small businesses, but that’s not where our benefits end. We offer subscribers complete insight and control into their finances, including issuing receipts, invoices, and other documents from a highly automated and customizable system. 

Access your finances anytime and anywhere from any smart device, evaluate your cash flow, follow up with late payers, or just invite your accountant and let them do it all for you. Billdu does it all! You can try any of our payment plans for 30 days completely free or start improving your accounting for just $4.99/month.

Final Thoughts on Streamlining Receipt Management

Throughout this article, we covered why receipts are crucial for both you and your customers. However, just because something is important does not mean it has to be difficult. The technological age has given us access to a wide range of tools to make running a business easier, and it’d be silly not to use them. 

Therefore, we highly encourage you to not just stick to what’s worked before and continue improving. Experiment with the multiple ways of making receipts we’ve discussed and find the one that works best for you! Or, as stated, you could always use Billdu and not worry about it.

Easily turn invoices into receipts!

Use the Billdu app on Android and iOS to quickly convert invoices into receipts. Simplify record-keeping and improve customer satisfaction effortlessly.