Invoices, Receipts and Proof of Payment: Tips and Templates

As your business starts to expand, it’s important to make the right impression to give your clients confidence in what you’re doing. Creating and issuing professional-looking invoices, receipts and proof of payment documents is essential if you want to be taken seriously by your clients, your accountant and your bank. This guide will walk you through how to get your paperwork right, how to generate the appropriate documentation and the best practices for managing your payments professionally.

Invoices, receipts and proof of payment: What are the differences?

For new and small businesses, at first the paperwork can seem overwhelming, but keeping accurate records is critical – not just for tax reasons, but also so you can keep track of your business finances. When it comes to getting paid by clients, you need to know how to make a receipt for payment, how to make an invoice for advance payment, how to send a payment request letter to a client or customer, how to make a request for payment release, how to make a request for approval of payment, and on and on.

But don’t be daunted – before too long it will seem like second nature.

One of the first things you need to understand is the differences between invoices, receipts and proof of payment. An  invoice is issued before any payment is received and details the charge for goods and services provided. A receipt, on the other hand, is issued after the payment is received, and confirms the payment has taken place.

Finally, proof of payment is a document that shows that the money has been transferred – for example, a bank statement or transaction receipt

Why you need to issue and record invoices, receipts and proof of payment

These are the essential records that allow you to keep track of transactions, money owed, where income has come from, and once your annual accounts are completed the records will enable you to pay the right amount of tax, and show how much you can claim for expenses, deductions and sales tax.

There are several reasons to keep an accurate record of your business payments and receipts. Businesses are legally required to keep accurate financial records so they can file annual accounts for tax assessment, while invoices need to be issued to trigger payments from other businesses. Sending a request for due payment or a request for balance payment also makes it clear how much a customer owes.

Receipts show that a product or service has been paid for and can be required as proof of ownership if a product needs to be returned or exchanged. Together, invoices, receipts, and proof of payment documentation create a paper trail that gives an accurate record of business activities for taxation and legal compliance.

Keeping accurate records of money coming into and going out of your business also helps you manage cashflow more effectively. Good record keeping is especially important if there is ever a dispute over payment, as it gives you the documentation needed to show what was agreed, requested, paid, or still owed.

How to send a payment request email to a client

Sending invoices, payment requests and issuing receipts for payments made will be an everyday element of running your business, so it’s something you need to be able to do effectively and efficiently. The best way of ensuring this is to use a payment platform like Payoneer which will provide you with a comprehensive set of tools for creating, sending and automating invoices and payment receipts, while providing and recording proof of payment.

Using your Payoneer’s “Request a Payment” feature, you can create and send professional standard invoices from within the platform, with no need for extra tools or software. Here’s how to get paid by clients in Payoneer:

1. Log in to your Payoneer account
2. Select “Request a Payment”
3. Fill in the client’s info, the details of the product or service provided, and the amount and currency
4. You can customize the request with your own company invoice if you want to or you can use the built-in invoice tool
5. Confirm the details and send the request – you customer will receive a link to make the payment in the agreed method, by card or bank transfer
6. You can track each payment request from your Payoneer dashboard

Creating proof of payment and receipts

Once payment has been received, your payment platform will notify you and your client, and the appropriate documentation will be created, with details of the transaction being added to your transaction history:

• Your dashboard will show the transaction as completed
• A receipt will be created using a contractor payment receipt template
• You’ll receive a notification when the funds are in your account
• A transaction report will be generated for your financial records

Best practices for invoices, receipts and proof of payment

The importance of keeping accurate financial records cannot be underestimated as a vital element to your business success story, so it is worth following a few simple best practices. Always double check the details when you input data about financial transactions, and make sure your profile has been verified with the required business documents uploaded into your payment platform’s verification center. This is essential if you want to request payments and make payment receipts online.

It is also important to understand how long payment is likely to take, as timelines will depend on the method of payment selected. Make sure you know what to expect and track any payment that seems to be taking too long. You should also factor in the cost of making financial transactions when choosing which payment method to accept, as payment platforms like Payoneer usually offer more competitive pricing than traditional banks.

Finally, keep accurate records using invoices, receipts and proof of payment documentation, so every transaction can be verified and tracked. If you need to invoice clients abroad, a payment platform like Payoneer can provide local receiving accounts so your customers can pay in their own currency. To learn more about how Payoneer can facilitate your payments, payment requests and record keeping, use their resources page.