What Are Different Types of Invoices? | Small Business Invoicing GuideThere are many different types of invoices businesses can create 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. Learn what type of invoice is right for your business by exploring these invoicing topics: What Are the Different Types of Invoices? What Is a Purchasing Invoice? What Is a Sales Invoice?
What Are the Different Types of Invoices?The different types of invoices that businesses can create for their clients are:
1. Standard InvoiceA standard invoice is issued by a business and submitted to a client. This is the most common form of invoice that small businesses create and the format is flexible enough to fit most industries and billing cycles. Standard invoices include the following details about the sale:
- The business’s name and contact information
- The client’s name and contact information
- An invoice number
- The amount of money the client owes the business for its services
2. Credit InvoiceA credit invoice, also called a credit memo, is issued by a business that needs to provide a client with a discount or a refund, or to correct a previous invoicing error. A credit invoice will always include 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.
3. Debit InvoiceA debit invoice, also called a debit memo, is issued by a business that needs to increase the amount a client owes to the business. Debit invoices can be useful to small businesses and freelancers when they need to make a slight adjustment to an existing bill. For example, if you sent a client an invoice based on your estimated hours and you ended up working additional hours on a project, you could send the client a debit invoice for the additional hours billed. Debit invoices are always written as positive numbers.
4. Mixed InvoiceMixed invoices combine credit and debit charges on one invoice, and the total amount can be expressed as either a positive or negative number. Small businesses rarely need to create mixed invoices for their services, but it could be necessary if you’re reducing the amount a client owes for one of the projects you’re billing for and increasing the amount owing for a different project billed on the same invoice.
5. Commercial InvoiceA commercial invoice is issued by a business for goods that it sells to customers internationally. Commercial invoices include details of the sale that are needed to determine customs duties for cross-border sales. The information included on a commercial invoice includes:
- Shipment quantity
- Weight / volume
- Description of goods
- Total value
- Packaging format
6. Timesheet InvoiceA timesheet is an invoice used when a business or employee is billing based on the hours they work and their standard rate of pay. Timesheets are used by contract employees who are paid hourly by their employer. They’re also common in industries where clients are billed hourly, including by:
- Creative agencies
- Business consultants
7. Expense ReportAn expense report is a type of invoice that an employee submits to an employer for reimbursement of business-related expenses. For instance, 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 that they paid up front.
8. Pro Forma InvoiceA pro forma invoice is an estimated invoice that a business sends to a client before providing their services. A pro forma invoice provides the client with an estimated cost of the work to be completed. Pro forma invoices may have to be altered once a project is complete to accurately reflect the hours worked.
9. Interim InvoiceAn interim invoice is used for billing on large projects where the business and the client have agreed to terms that include multiple payments. A business 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.
10. Final InvoiceA final invoice is sent to the client once a project has been completed to request payment. The final invoice is usually more detailed than a pro forma or interim invoice and typically includes the following:
- An itemized list of all services provided
- Total cost of the project
- Invoice number
- Invoice due date
- Payment methods accepted
11. Past Due InvoiceA past due invoice is sent by a business if their client doesn’t provide payment by the due date listed on the final invoice. You should send past due invoices to clients as soon as they miss a payment due date. Past due invoices include all the service and payment details listed on the final invoice and they also include any late fees or interest charges.
12. Recurring InvoiceRecurring invoice are useful for businesses that charge clients the same amount periodically for their services. Recurring invoices are common among IT businesses, who charge their clients the same amount each month for a package IT service. Or, if you’re a freelance digital marketer, you might offer social media marketing packages to your clients with standard pricing per month. Cloud-based invoicing software lets you automate the process of creating recurring invoices and can even send out the invoices on the same day each month, so you don’t have to think about it.
13. E-invoiceE-invoice is a blanket term applied to any invoice sent electronically, regardless of the specific type of invoice being sent. E-invoicing is becoming standard practice among small businesses and freelancers. E-invoices are quicker and easier to create than standard print invoices and they help you get paid faster for your services.
What Is a Purchase Invoice?A purchase invoice is a commercial document that a seller provides to a buyer that outlines the goods or services purchased, the quantity sold and the sale price. Purchase invoices are used to prove a product or service was bought and the amount paid for it.
What Is a Sales Invoice?A sales invoice is a document that a business sends to a client 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 invoicing guide for small businesses to learn how to create your own invoices and download simple, professional invoice templates.