Invoice vs. Cash Memo — What's the Difference?
By Tayyaba Rehman — Published on November 23, 2023
Invoice is a document itemizing goods/services before payment, while Cash Memo is a document confirming payment received for goods/services.
Difference Between Invoice and Cash Memo
Table of Contents
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Key Differences
An Invoice, functioning as a detailed bill presented by a seller to a buyer, outlines the quantity and costs of the items or services provided by the seller. A Cash Memo, in stark contrast, directly pertains to transactions that have been concluded with an immediate payment, and it affirms the receipt of the payment for the goods or services.
While an Invoice is generally issued with the expectation of future payment, providing detailed information about the transaction to ensure clear communication between buyer and seller, a Cash Memo is succinctly issued after the transaction, serving as proof of the payment and purchase, commonly for the buyer’s records.
Invoicing systems are often integrated into broader accounting systems, used to track sales, manage customer payments, and even generate financial reports. The Cash Memo is simpler, typically eschewing the comprehensive detail seen in invoices, as it primarily validates that a transaction has occurred and payment has been made.
Interestingly, an Invoice typically contains payment terms, descriptions, prices of the goods/services, and additional applicable taxes to inform the customer of the outstanding amount. In comparison, a Cash Memo often immediately follows a transaction and is typically provided in scenarios where the goods or services are paid for instantaneously, thus necessitating an immediate acknowledgement of payment receipt.
It’s important to highlight that while an Invoice can be used to track payment status and is vital for managing receivables in the financial books, a Cash Memo isn’t generally utilized for such tracking since the payment is instantly processed and doesn’t require monitoring or follow-up in most scenarios.
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Comparison Chart
Payment Timing
Indicates future payment required
Confirms payment has been received
Issuance Timing
Issued prior to payment
Issued post-payment
Purpose
To request and detail payment due
To acknowledge payment received
Detailed Information
Contains detailed information on goods/services
Generally, provides less detail
Usage in Financial Tracking
Used to manage and track receivables
Typically not used to track receivables
Compare with Definitions
Invoice
Invoices may offer various payment terms.
The invoice provided 30-day payment terms for the bulk order.
Cash Memo
Cash Memos are provided post-payment.
After paying in cash, the customer was handed a cash memo.
Invoice
An Invoice can serve as a legal record of a sale.
The business kept all issued invoices for tax purposes.
Cash Memo
Cash Memos typically confirm cash transactions.
Each cash transaction at the shop was accompanied by a cash memo.
Invoice
Invoices are utilized to manage and track payments.
The finance department followed up on overdue invoices regularly.
Cash Memo
A Cash Memo confirms a completed transaction.
The store provided a cash memo immediately after the purchase.
Invoice
Invoices typically include detailed transaction information.
The invoice listed all the purchased items with their respective prices.
Cash Memo
Cash Memos are generally concise documents.
The concise cash memo succinctly confirmed the transaction details.
Invoice
A detailed list of goods shipped or services rendered, with an account of all costs; an itemized bill.
Cash Memo
A Cash Memo serves as proof of purchase.
The customer kept the cash memo as proof of the transaction.
Invoice
The goods or services itemized in an invoice.
Invoice
To make an invoice of (goods or services).
Invoice
To send an invoice to; bill.
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.
Invoice
The lot or set of goods as shipped or received.
The merchant receives a large invoice of goods.
Invoice
The price which a seller or dealer pays the manufacturer for goods to be sold.
Invoice
(transitive) To bill; to issue an invoice to.
I will invoice my supplier tomorrow.
Invoice
(transitive) To make an invoice for (goods or services).
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.
Invoice
The lot or set of goods as shipped or received; as, the merchant receives a large invoice of goods.
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.
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
Invoice
Send an bill to;
She invoiced the company for her expenses
Invoice
An Invoice requests payment for goods/services.
The contractor sent an invoice for the completed renovation work.
Common Curiosities
What is the main purpose of an Invoice?
An Invoice primarily serves to detail and request payment for goods or services provided.
What details are typically included on an Invoice?
An Invoice usually includes details like item descriptions, quantities, prices, total cost, and payment terms.
Is a Cash Memo issued before or after payment?
A Cash Memo is issued after payment, confirming the transaction.
Are Cash Memos only for cash transactions?
Typically yes, but Cash Memos can also confirm immediate payments made via other instant payment methods.
Can an Invoice be used to track receivables?
Absolutely, invoices are pivotal for tracking receivables and managing an entity’s finances.
Can an Invoice act as a legal document?
Yes, an Invoice can serve as a legal document, detailing the terms and specifics of a transaction.
What is a Cash Memo utilized for?
A Cash Memo is utilized to confirm and acknowledge the receipt of payment in a transaction.
Does a Cash Memo indicate payment is due?
No, a Cash Memo confirms that payment has been made and received.
Are payment terms specified on an Invoice?
Yes, payment terms, indicating when payment is due, are typically outlined on an invoice.
Can an Invoice include a breakdown of services rendered?
Yes, an Invoice often includes a detailed breakdown of services, quantities, and costs.
Can an Invoice be sent electronically?
Yes, invoices can be sent electronically, often referred to as e-invoices.
Is a Cash Memo used for tracking payments in accounting?
Generally no, since a Cash Memo confirms immediate payment, it is not used for tracking pending payments.
Can an Invoice be adjusted after being issued?
Adjustments post-issue may require an additional document, like a credit note, to amend the original invoice.
What information does a Cash Memo generally contain?
A Cash Memo typically contains transaction details, though less comprehensive than an invoice, and confirms payment.
Does a Cash Memo include detailed descriptions of items?
Cash Memos tend to be less detailed than invoices, often just confirming payment and summarizing the transaction.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
