Difference Between Invoice and Cash Memo

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A business transaction is one that is capable of being measured in monetary terms and that affects the company’s operations. There are hundreds of business transactions that takes place daily. To record these transactions, there are different kinds of commercial documents are used. One such document is an invoice, which may be understood as a legal and commercial instrument, made by the vendor and sent to the customer or client, to authorize the sale. It sets forth, all the goods sent or services provided, for which the payment is not made by the customer.

In contrast, cash memo alludes to a voucher, which is used at the time of cash sales to the customer. It lists out name and address of the customer, quantity, description, price of the product, discount and taxes thereon. Many think that invoice is equal to cash memo, which is not true, as there is a fine line of difference between invoice and cash memo.

Comparison Chart

Basis for Comparison	Invoice	Cash Memo
Meaning	A commercial document issued by the seller to the buyer to make a request for payment.	A commercial document issued by the seller to the buyer when cash is received as a payment.
Time of Issue	Prior to payment.	At the cash payment.
Issued at the time of	Credit Sales	Cash Sales
Evidence of	Payment Due	Payment Received

Definition of Invoice

An Invoice is a non-negotiable instrument which indicates the indebtedness of the purchaser to the seller. The seller gives it to the buyer for making a request for payment for the goods sold or services rendered to him. It is used to record day to day the sale transaction.

A typical invoice may contain the following details:

Date of issue of invoice
Invoice Number
Name and address of buyer
Name and Address of Seller
Unit Price of Goods
Quantity
Discount (if any, but only trade discount)
Tax (VAT or Service tax as the case may be)
Total Amount due
Signature of the seller or his authorized agent.

Definition of Cash Memo

Cash Memo is also a non-negotiable commercial instrument indicating, the cash has been received from the purchaser for the goods sold to him. It works as a proof of cash payment made. When the cash is received for the sold goods, no debit is raised against it. The cash memo contains the following description:

Date
Serial Number
Name and address of supplier
Name and address of buyer
Unit price of goods
Quantity
Discount (if any, both for trade and cash discount)
Tax (VAT or Service tax as the case may be)
Total Amount Received
Signature of the cashier.

Key Differences Between Invoice and Cash Memo

The difference between invoice and cash memo can be drawn clearly on the following grounds:

An instrument indicating the payment due against any goods sold or services rendered is invoice. Conversely, an instrument indicating cash payment made for the merchandise is known as a cash memo.
An Invoice is raised before the payment while cash memo is raised when the payment is made.
An Invoice is issued for the credit transaction as a proof of amount due, whereas cash memo is issued for cash transaction as a proof of the amount received.
Signature of the seller or his agent is there in the invoice. On the other hand signature of cashier is found in the cash memo

Similarities

Non-negotiable commercial document.
Raised by the supplier of goods or services.
Sent to the purchaser or receiver of goods or services.

Conclusion

Invoice and Cash Memo both are business voucher raised at different events. An Invoice can be sales invoice from seller’s perception and purchase invoice from a buyer’s perception. With the help of invoice, the seller can quickly locate the payment on which invoices are made and which are still due.

On the other hand, Cash Memo is the proof of the amount paid by the buyer. The seller retains a copy for future reference.