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“One man’s trash is another man’s treasure.”
“One man’s ceiling is another man’s floor.”
These popular sayings serve to explain that most of what we experience in life is subject to our perspective. The same can be true in accounting:
“One man’s invoice is another man’s bill.”
QuickBooks uses the terms invoice and bill for very distinctive reasons. Business owners may consider them to be the same thing, but the difference is all in your perspective.
Our word invoice comes from the Sixteenth Century French word envoyer, which means send. Well, that makes a lot of sense, doesn’t it? You send an invoice to your customer because you want her to pay you.
We will also see invoice used as a verb. “Did you invoice Ms. Jones for the hat she ordered?”
If you want to be paid for that hat, you better make sure you invoice her.
The word bill comes from the Medieval Latin word bulla, meaning sealed document. That became the Anglo-Norman French word bille, which morphed into the English word bill. Your vendor sends you a bill that you will then pay. If you print the paper and mail it, your customer will receive a sealed document. Even if you email it, there is a sense of it being a sealed document as long as that mail account is protected.
This word, too, has become a verb. “You billed me for two hats, but I only ordered one.”
Could a single document be both? Like the trash vs. treasure metaphor, it depends on your perspective. You can create an invoice for Ms. Jones for her hat. You can email the invoice to her. She will receive the document and now have a bill to pay. Same thing. Different purposes.
Are the two words interchangeable? In some ways they are. You can invoice your client for a hat, or you can bill your client for a hat. Either way, you’re sending a document that you want your client to pay.
But you don’t necessarily use both words when you’re talking about paying. You say, “I have to pay my bills today.” You don’t typically say, “I have to pay my invoices today.” It’s also become a colloquialism for the benefits of employment. “I don’t love my job, but it pays the bills.” No one says, “it pays the invoices.”
With QuickBooks, as with all accounting, we need to be able to distinguish between the documents we want our customers to pay and the documents our vendors want us to pay. That distinction is handled with invoices and bills. That’s why on a Customer page, you will have the option to create an invoice, but on a Vendor page, you’ll have the option to create a bill.
It’s really smart to have different terms because it helps define the work trail in your own firm. “Mary, please get me a report of unpaid invoices.”
“Sure. Do you want the ones we owe to vendors, or the ones customers owe to us?”
Using both bills and invoices eliminates that confusion.
Thanks, QuickBooks, for giving us those defining words.