A payment receipt is issued upon the payment of a good or service. When you go to the local grocer, for example, to purchase your food, you’ll be issued a receipt. This proves that you entered into a transaction which involved exchanging money for your food. Payment receipts are issued whenever there has been an exchange involving money and a good or service, whether it’s food or getting your vehicle repaired. It’s proof that the transaction occurred and what was involved in the transaction.
What is Included in the Payment Receipt
The reason payment receipts are used to provide a record of the transaction and while payment receipts vary from business to business, most will include the same general information. This information includes:
Date and time of the transaction: The date and time of the transaction refers to the exact moment money was exchanged for the good or service.
A transaction number and description of the purchase: Transaction numbers are critical when it comes to a store controlling its inventory. It also provides the purchaser with further proof of the transaction.
Include the price paid, along with taxes and method of payment: The payment receipt records that price paid for the item at the time money was exchanged for the item. Very useful in case the item was mismarked, and you need to get your money back. Methods of payment include cash or credit. Taxes paid are also present on the payment receipt.
Difference Between a Payment Receipt and a Sales Receipt
Payment Receipt: As previously stated, a payment receipt is as its name implies: A record of the amount of payment made in exchange for a good or service. The money has already exchanged hands at the point of purchase. You can also have payment receipts for items kept on layaway, even if the item was not received, as you are making payments toward the item.
Sales Receipt: In contrast, a sales receipt is also known as an invoice, and is requesting payment. Invoices will have a detailed list of what was involved. For instance, the invoice of a contractor might include the number of hours for labor, how many cans of paint, new tools, etc.
Reasons to Issue a Payment Receipt
There are several good reasons to issue a payment receipt when money is exchanged for a good or service. The main one involves proof. No matter if you’re purchasing a goldfish or winter coat, the payment receipt is evidence that you exchanged the correct payment for the item received.
Another good reason may be for tax purposes. Here, payment receipts, such as property tax payments are crucial when it comes to proving that you’ve paid them. Other examples are payment receipts involving medical expenses or business expenses. If you’re claiming transportation as a deductible, then you’d need the receipts from plane tickets, taxi or other ride-sharing services such as Uber. Other payment receipts to keep include:
- Childcare expenses
- Work-related expenses
- Self-employment expenses
As you can see, life would be quite a mess without the payment receipt. They are a record of our cash transactions as well as serve as a record for tax purposes. Payment receipts are also seen as a formal business document and kept and maintained by the business’s accounting department. They are similar to, but not the same as an invoice or sales receipt, as the sales receipt is not completed at the exact moment as the transaction.