Difference between an invoice and a voucher
An invoice is a detailed bill from an outside supplier or a vendor for goods and/or services rendered to a company. Typically, it lists the quantity of each item, prices, billable hours, a service description, and a contact address for payment. An invoice is usually paid through an accounts payable department by the posted due date.
A voucher is an internal document used in a company’s accounts payable department in order to collect and organize the necessary documentation and approvals before paying a vendor invoice. A voucher is usually prepared after a vendor’s invoice has been matched with the company’s purchase order and receiving report.
What is accounts payable?
An account payable is an obligation to a supplier or vendor for goods or services that were provided in advance of payment.
To illustrate an account payable let’s assume that you’re a PeopleSoft consultant working for Oracle Corporation and you’re providing consultancy services for the HR Department of a client named Caterpillar Inc. At the end of every month, based on the number of hours you worked in the month, Oracle will send an invoice to Caterpillar for the dollar amount of services rendered. The invoice will also state the due date (usually within 30 days). After reviewing and approving the invoice, Caterpillar enters Oracle’s invoice into its accounting records with a credit to Accounts Payable and debit to their HR Department.
Until the invoice from Oracle is paid, Oracle’s invoice serves as the supporting document for Caterpillar’s accounts payable and also as a supporting document for Oracle’s account receivable.
What is accounts receivable?
Accounts receivable is the money that a company has a right to receive because it had provided customers with goods and/or services. Continuing with the above example, Oracle will have an account receivable when it sends the invoice to Caterpillar until it receives the money. Caterpillar on the other hand will have an account payable). Accounts receivables are also known as trade receivables.
Accounts receivable are reported as a current asset on a company’s balance sheet. Good accounting requires that an estimate be made for the amount that is unlikely to be collected.