Invoice vs. Cash Memo: Know the Difference
By Shumaila Saeed || Published on January 31, 2024
An Invoice is a detailed bill provided by a seller to a buyer on credit transactions, outlining goods sold or services rendered. A Cash Memo is a receipt acknowledging the payment for goods or services purchased in cash.
Key Differences
An Invoice is a formal document issued by a seller to a buyer in credit transactions, detailing the goods or services provided and the amount due. It's used for tracking sales and accounts receivable. A Cash Memo, on the other hand, is given to a buyer when a purchase is made with immediate payment, usually in cash, and serves as proof of the transaction.
Shumaila Saeed
Jan 31, 2024
Invoices are typically used in business-to-business transactions where payment is made after the delivery of goods or services. They include terms of payment, itemized charges, and payment due date. Cash Memos are common in retail and point-of-sale transactions and confirm that the payment has been received.
Shumaila Saeed
Jan 31, 2024
The purpose of an Invoice is to request payment and record sales on credit. It’s an essential document for bookkeeping and accounting, often used to track inventory and sales performance. A Cash Memo acts more as a receipt, providing evidence of the transaction for both the buyer and seller, primarily for cash-based sales.
Shumaila Saeed
Jan 31, 2024
Invoices often have a longer processing time, as they allow buyers a period (typically 30-90 days) to make the payment. They play a crucial role in managing cash flow in businesses. Cash Memos are immediate and are given at the time of the transaction, indicating instant payment.
Shumaila Saeed
Jan 31, 2024
In legal terms, an Invoice serves as a contractual agreement where the seller requests payment for services or goods provided on credit. A Cash Memo, however, is more of a transactional record confirming that a sale has occurred and payment has been made.
Shumaila Saeed
Jan 31, 2024
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Comparison Chart
Purpose
Requests payment for credit transactions
Acknowledges payment for immediate transactions
Shumaila Saeed
Jan 31, 2024
Usage
In B2B transactions, services, and credit sales
In retail, point-of-sale transactions, and cash sales
Shumaila Saeed
Jan 31, 2024
Function
Details goods/services, payment terms, and due dates
Acts as a receipt for the transaction
Shumaila Saeed
Jan 31, 2024
Payment Timing
Allows a period for payment post-delivery
Implies immediate payment at the time of sale
Shumaila Saeed
Jan 31, 2024
Legal Role
Contractual agreement for payment
Proof of sale and payment received
Shumaila Saeed
Jan 31, 2024
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Invoice and Cash Memo Definitions
Invoice
An Invoice is a document issued by a seller listing goods or services provided and requesting payment.
The contractor sent an invoice for the completed repair work.
Shumaila Saeed
Jan 07, 2024
Cash Memo
A Cash Memo serves as proof of sale and payment for both buyer and seller.
The cash memo was kept as proof of the transaction for future reference.
Shumaila Saeed
Jan 07, 2024
Invoice
An Invoice details the price, quantity, and terms of payment for products or services sold.
Upon delivering the goods, the company issued an invoice to the client.
Shumaila Saeed
Jan 07, 2024
Cash Memo
Cash Memos are issued in retail transactions to confirm immediate payment.
The shopkeeper handed a cash memo with details of the items sold.
Shumaila Saeed
Jan 07, 2024
Invoice
An Invoice serves as a record of sale and a request for payment in credit transactions.
The monthly service was completed, and an invoice was sent for payment.
Shumaila Saeed
Jan 07, 2024
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Cash Memo
Cash Memos are common in cash-based sales, especially in retail.
For every sale, the store issues a cash memo to the customer.
Shumaila Saeed
Jan 07, 2024
Invoice
An Invoice can be a legal document indicating the buyer's obligation to pay the seller.
The invoice listed all the terms of payment agreed upon by both parties.
Shumaila Saeed
Jan 07, 2024
Cash Memo
A Cash Memo is a receipt that acknowledges cash payment for goods or services.
After purchasing the groceries, the customer received a cash memo.
Shumaila Saeed
Jan 07, 2024
Invoice
A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill.
Shumaila Saeed
Jan 06, 2024
Cash Memo
Cash Memos help in tracking daily sales and maintaining financial records in cash transactions.
The retailer used the cash memos to tally the day's sales.
Shumaila Saeed
Jan 07, 2024
Invoice
A bill; a commercial document issued by a seller to a buyer indicating the products, quantities and agreed prices for products or services that the seller has already provided the buyer with. An invoice indicates that, unless paid in advance, payment is due by the buyer to the seller, according to the agreed terms.
Shumaila Saeed
Jan 06, 2024
Invoice
The lot or set of goods as shipped or received.
The merchant receives a large invoice of goods.
Shumaila Saeed
Jan 06, 2024
Invoice
The price which a seller or dealer pays the manufacturer for goods to be sold.
Shumaila Saeed
Jan 06, 2024
Invoice
(transitive) To bill; to issue an invoice to.
I will invoice my supplier tomorrow.
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Jan 06, 2024
Invoice
A written account of the particulars of merchandise shipped or sent to a purchaser, consignee, factor, etc., with the value or prices and charges annexed.
Shumaila Saeed
Jan 06, 2024
Invoice
The lot or set of goods as shipped or received; as, the merchant receives a large invoice of goods.
Shumaila Saeed
Jan 06, 2024
Invoice
To make a written list or account of, as goods to be sent to a consignee; to insert in a priced list; to write or enter in an invoice.
Goods, wares, and merchandise imported from Norway, and invoiced in the current dollar of Norway.
Shumaila Saeed
Jan 06, 2024
Invoice
An itemized statement of money owed for goods shipped or services rendered;
He paid his bill and left
Send me an account of what I owe
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Jan 06, 2024
Invoice
Invoices are essential for tracking sales, inventory, and managing accounts receivable in businesses.
The finance department processed invoices to monitor cash flow.
Shumaila Saeed
Jan 07, 2024
Repeatedly Asked Queries
When is an Invoice used?
Invoices are used in credit sales and B2B transactions.
Shumaila Saeed
Jan 31, 2024
What is a Cash Memo?
A Cash Memo is a receipt acknowledging payment for a cash transaction.
Shumaila Saeed
Jan 31, 2024
Does a Cash Memo have legal significance?
Yes, it serves as legal proof of a completed transaction and payment.
Shumaila Saeed
Jan 31, 2024
When is a Cash Memo issued?
A Cash Memo is issued at the point of sale in cash transactions.
Shumaila Saeed
Jan 31, 2024
What details does an Invoice include?
Invoices include itemized charges, total amount due, and payment terms.
Shumaila Saeed
Jan 31, 2024
What is an Invoice?
An Invoice is a document requesting payment for goods or services on credit.
Shumaila Saeed
Jan 31, 2024
How do Invoices help in business?
They help in tracking sales, managing accounts receivable, and bookkeeping.
Shumaila Saeed
Jan 31, 2024
Can an Invoice be issued after payment?
Typically, Invoices are issued before payment is made.
Shumaila Saeed
Jan 31, 2024
Is an Invoice a legal document?
Yes, an Invoice can serve as a legal request for payment.
Shumaila Saeed
Jan 31, 2024
What information is found on a Cash Memo?
Cash Memos list the items sold, quantity, price, and total payment received.
Shumaila Saeed
Jan 31, 2024
What is the role of a Cash Memo in retail?
It helps in tracking daily sales and confirming transactions.
Shumaila Saeed
Jan 31, 2024
What is the payment timeframe for Invoices?
Payment terms vary, typically ranging from 30 to 90 days.
Shumaila Saeed
Jan 31, 2024
Does a Cash Memo indicate immediate payment?
Yes, it signifies that payment was made at the time of the transaction.
Shumaila Saeed
Jan 31, 2024
Do Invoices facilitate credit transactions?
Yes, they are primarily used in transactions where payment is deferred.
Shumaila Saeed
Jan 31, 2024
Can Invoices be used for tracking inventory?
Yes, they are used to track sales and inventory levels.
Shumaila Saeed
Jan 31, 2024
Is a Cash Memo given before or after payment?
A Cash Memo is given after payment is made.
Shumaila Saeed
Jan 31, 2024
Are Cash Memos used in credit sales?
No, Cash Memos are used in immediate, cash-based sales.
Shumaila Saeed
Jan 31, 2024
How do Cash Memos assist in financial management?
They help in maintaining financial records and tracking daily cash flow.
Shumaila Saeed
Jan 31, 2024
Are Invoices necessary for accounting?
Yes, they are essential for accurate accounting and financial reporting.
Shumaila Saeed
Jan 31, 2024
Do Cash Memos need to be preserved for accounting?
Yes, they should be kept as records for financial accounting and audits.
Shumaila Saeed
Jan 31, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
Shumaila Saeed
