What is the Difference Between a Bill and an Invoice?

If you’re looking for a difference Between a Bill and an Invoice, then this article has the information you need. We’ll break down the differences between an invoice and a bill in SAP and show you how they interact to help you better understand the underlying differences.

The interchangeability of terminology like “invoice” and “bill” in financial transactions sometimes confuses both businesses and consumers. It is crucial to understand that various financial documents differ significantly from one another. In this thorough guide, we will explore these distinctions and provide you an understanding of the specific goals, contents, and ramifications of each financial document.


invoicing and bill are frequently used interchangeably. An invoice (itemized account statement or Bill of Payment) is a document that normally describes an agreement that grants a corporation the right to do business with a customer. it could be for a sales order, purchase order, contract, or another form of commercial transaction.

it is a commercial document in which a company reports or summarises prior product and service deliveries to another company or individual. A bill (i.e., electricity, phone, internet service bill) is a document used by a company (or individual) to report its debtors for services or products it has provided to them. On the other hand, a bill is a document that shows the buyer’s credit balance owed to the seller. It usually contains the date, number of items, unit price, and total price of purchases or services provided. A bill is typically a statement that records the amount of money owed to you, whereas an Bill of Payment statement is an official document that contains all of the details of what was paid for and when it was paid for.

What is an Invoice?

An invoices (Bill of Payment) is a document sent to a buyer that identifies a transaction for which the customer is owed an amount towards the company that issued it. This document is both the issuer’s asset and the client’s liability. Alternatively, it commercial documents that companies send to their customers to pay for work. it is outline the service /product provided and describes the amount due for the service provided.

Typically, businesses send itemized account statements to their customer following the product or service delivery. But, based on the agreement’s specifics between the sides, the Bill of Payment may be issued following a specific deadline for the project or time frame (e.g. for a long project, once every two weeks). The Bill of Payment informs the customer or buyer of their debt and the transaction’s payment terms. This ensures that businesses are paid the correct total amount and on time.

Bill of Payment numbers is a unique sequence of regularly assignable to all documents. the numbers are among the most crucial aspects of the Bill of Payment since they ensure that your income is documented correctly to aid in tax and accounting. In addition, they make it easier to monitor payments and handle overdue Bill of Payment. Please refer to the example below :


What Is a Tax Invoice?

Tax invoice is a document for the taxable supply of products and services. In general, a tax statement contains information such as a description, the amount of service/goods provided, the amount of tax due, and any other information that may be specified. The tax statement is the primary document used by the recipient to claim tax credits for product and service inputs.

What Is a Bill?

A bill is basically an in-depth bill issued by suppliers, vendors, and other third parties for services or goods provided to a business. Bills are written statements of charges that outline the amount that a buyer is liable for purchasing goods or services provided. The bill’s goal is to act as legal proof for the seller and buyer to prove that a sale transaction was conducted. Bills are generally used to facilitate one-time upfront payments, like retail purchases. In contrast to an Bill of Payment, the billing process initiated payment processing

Difference Between a Bill and an Invoice
Difference Between a Bill and an Invoice

A billing document’s SAP structure is separated into two parts: the header and the item.

Header: In the header section, we can find general information that applies to the entire billing document. For instance,

  • The identification number for the payee
  • Billing date
  • The whole bill document’s net amount
  • Document currency 
  • Incoterms, 
  • Payment Terms
  • Partner numbers
  • Pricing elements

Items: we will find information specific to a particular item in the categories. For instance,

  • Material number/service details
  • Billing quantity
  • The net value of individual items
  • Volume and weight
  • The number of the billing document’s reference document (for instance, the number of the delivery upon which the billing document is)
  • Pricing aspects that apply to specific products
  • The billing type manages the document for billing.

What is the billing type in SAP?

Billing Types are the different business transactions involved in Billing SAP has defined different billing Types, e.g. Credit Memo, Debit Memo, Proforma For Services Rendered Bill of Payment list. The majority of billing documents aren’t invoices, but those are billing documents. Billing documents are broad, while the it is specific transactions such as the proforma bill or credit memo

There are many billing types used in SAP, Here are below the list of document used to cater to various scenarios in SAP SD :

  • F1 -Delivery-related
  • F2 -Order-related
  • F5 -Pro forma for sales order
  • F8 -Pro forma for delivery
  • CR -Credit memo
  • L2– Debit memo
  • RE– Credit memo for returns
  • S1 -Cancellation
  • S2– Cancellation credit memo

What is the difference Between a Bill and an Invoices?

The terms “billing” and “invoices” are interchangeable. However, we do make a distinction based on usage. Here are a few key issues to think about.

 The document that you provide to your customers and clients for services or products.it should be legal complianceBilling is a Generic word used to describe bills, credit memos debit memos pro forma invoices as well as cancellation documents. Mostly used for internal use
An invoice is a document indicating to deliver of goods/services providedBilling is a receipt of payment
The payment is due within the agreed-upon timeframe (typically 30 to 90 days after the Bill of Payment is sent).The payment is due on the date of receipt.
Bill of Payment are provided when an item or service arrives and are intended to be used as a long-term, recurring transaction.The bills are for purchase on a one-time basis and are generally given prior to shipment of a particular item or service.

For purchases made on credit, Bill of Payment are issued.
Bills are provided for transactions that are completed all at once.
What is the difference between an invoice and a bill?


How to proceed with the billing in sap

  • Create Billing Document-VF01
  • Change Billing Document-VF02
  • Display Billing Document-VF03
  • Create Invoice list-VF21
  • Change Invoice list-VF21
  • Display Invoice list-VF23
  • Canceled Billing Document-VF11
  • Process Billing Document-VF04
  • Display Block Billing Document-VFX3
  • Reverse /Cancelled Billing Document-VF26

How to do Configuration Settings for Billing in SAP?

Define Billing Type in SAP SD -VOFA
Define Number Range for Billing Document -VN01
Sales Document to Billing Document Copy Control -VTFA
Billing Document to Billing Document Copy Control-VTFF
Delivery Document to Billing Document Copy Control-VTFL
Define & Assign Blocking Reasons-SPRO IMG

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