Types of Invoices Business should know

An invoice is a document issued by a seller to a buyer to request payment for the products or services provided.

It includes transaction details, such as invoice number, service or product details, payment terms and methods, the total cost, and due date.

There are 12 types of invoices, and the most commonly used ones are the standard invoice, proforma invoice, commercial invoice, and invoice for advance payment. Understanding how to use the different invoice types is essential for effective business operations.

Businesses can create many different types of invoices for their clients, and the type of invoice you choose will depend on your industry, how you bill for your services and how often you plan to get paid.

Types of Invoices for Businesses

1. Standard Invoice

   A standard invoice, also known as a “basic invoice” or simply an “invoice,” is created by a business and given to a client. It is the most common form of invoice created by small businesses, and the format is flexible enough to fit most industries and billing cycles. Invoices include the following information about the sale:
   • Selling company name and contact information
   • Buying company name and contact information
   • A unique invoice number
   • Description of services with payment amount
   • Invoice date
   • Invoice due date
   • Invoice payment terms
   • Payment instructions
   
   On e-cont.md, for the convenience of users, we divide standard invoices into 3 sub-types:
   • Simplified invoice
   • Invoice for goods
   • Invoice for services

2. Proforma Invoice

   A pro forma invoice is sent prior to the delivery of the goods or services and provides the buyer with a good faith estimate of the final cost. Although it’s not the final version, this type of invoice gives the buyer a chance to negotiate delivery terms prior to receiving the final request for payment.
   Because pro forma invoices are sent before the product is received by the buyer, they include information like:
   • Description of the goods or services
   • Buyer and seller information
   • Invoice number
   • Invoice issue date
   • Shipping details, including weight, shipping date, transportation method, etc.
   • Transport charges (shipping costs)
   • VAT, or other taxes that could apply

3. Commercial Invoice

   A commercial invoice is issued by a business for goods it sells to clients around the world. Commercial invoices include the sales information needed to determine customs duties on cross-border sales.
   Information on a commercial invoice includes:
   • Type of export
   • Reason for export
   • Carrier
   • Carrier tracking number
   • Country of origin
   • Terms of trade
   • Total gross weight of product
   • Currency code

4. Recurring Invoice

   Recurring invoices are useful for businesses that periodically charge clients the same amount for their services. Recurring invoices are common among IT businesses that charge their clients the same amount each month for a package of IT services. Or, if you’re a freelance digital marketer, you might offer social media marketing packages to your clients with standard monthly pricing. Cloud-based invoicing software lets you automate the process of creating recurring invoices and can even send out the recurring invoice on the same day each month, so you don’t have to think about it.

5. Timesheet Invoice

   A timesheet invoice is a standard invoice based on a timesheet. These invocies are used when a company or employee issue invoice based on hours worked and a standard rate of pay. Contract workers who are paid hourly by their employers often use timesheets. For guidance, see our post on how to create a timesheet that accurately measures the length of work and tasks.
   This approach to invoicng is common in industries that esimate works and services on an hourly basis, such as:
   • Lawyers
   • Creative agencies
   • Business consultants
   • Psychologists

6. Interim Invoice

   An interim invoice is ideal for invocing on large projects where the business and the client have agreed to terms that include multiple payments. A company or freelancer will submit interim invoices when certain milestones are completed toward the larger project. Interim invoices help small businesses manage their cash flow while working on projects over long periods of time.

7. Final Invoice

   A final invoice is sent to a client to request payment after a project is completed. A final invoice is usually more detailed than a pro forma or interim invoice and typically includes the following:
   • A detailed list of all services provided.
   • Total cost of the project
   • Invoice number
   • Due date of the invoice
   • Accepted payment methods

8. Overdue Invoice

   An overdue invoice (unpaid) is a regular invoice that has passed its due date. A company sends overdue notices when its client fails to pay by the due date stated on the final invoice. Send outstanding invoices to clients as soon as they miss a payment deadline. Overdue invoices include all the details of services and payments listed on the final invoice, plus any late fees or interest.

9. Credit Invoice

   A credit invoice, also called a credit memo or credit note, is issued by a business that needs to provide a client with a discount, refund or to correct a previous invoicing error. A credit invoice always includes a negative total number. For example, if you’re providing a credit invoice to a client to detail a $50 refund, the total on the credit invoice would be -$50.

10. Debit Invoice

    A debit invoice, also called a debit note or debit memo, is issued by a business that needs to increase the amount a client owes the business. Debit invoices are useful for small businesses and freelancers when they need to make small changes to an existing invoice. For example, if you send a client an invoice based on estimated hours and end up working extra hours on a project, you can send the client a debit invoice for the extra hours invoiced. Debit invoices are always recorded as positive numbers.

11. Mixed Invoice

    Mixed invoices combine credit and debit charges into one invoice, and the total amount can be either positive or negative. Small businesses rarely need to issue mixed invoices for their services. However, it may be necessary if you decrease the amount a customer owes for one project you are invoicing and increase the amount owed for another project on the same invoice.

12. Expense report

    An expense report is a invoice that an employee submits to an employer to reimburse business-related expenses. For example, if you send an employee to a lunch meeting with a client, they can create an expense report to invoice your company for the cost of the lunch, parking, and gas they paid for.

Electronic invoice is a general term applied to any invoice sent electronically, regardless of the specific type of invoice.

Electronic invoicing is becoming a standard practice among small businesses and freelancers because they are quicker and easier to create than printed invoices, and they help you get paid for your services faster.

What is a Purchase Invoice?

A purchase invoice is a commercial document a seller provides to a buyer that outlines the goods or services purchased, the quantity sold, and the sale price. Purchase invoices prove a product or service was bought and the amount paid for it.

What is a Sales Invoice?

A sales invoice is a document a business sends clients to request payment for their products or services. A sales invoice includes a description of the product or service sold, the quantity, and the price. Sales invoices serve as an official record of a sale for both the buyer and the seller.

Use our step-by-step guide to invoicing for small businesses to learn how to create your own invoices and download simple, professional invoice templates.

Templates of electronic invoice for payment in e-Cont.md