18 Invoice Types (With Definition, Uses and Benefits)
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Receiving and sending invoices is an essential part of selling and buying products or services. Invoices offer sellers and buyers records of transactions and crucial payment details. Understanding the different invoice types can help you choose the best options in specific circumstances. In this article, we define what invoices are and review the various types of invoices.
18 invoice types you can use to record transaction details
Before discussing the main invoice types you can consider using, it's important to define what an invoice is. An invoice is a document that a seller gives to the buyer to collect payments. It outlines the price of a product or service and establishes the customer's responsibility to pay a specific amount of money for the services or goods. By producing a physical record of a deal between a buyer and seller, invoices can help organisations have accurate and complete books and accounts. Invoices can serve various purposes, including:
create records of account receivables and sales
request payment from clients
track outgoing inventory
create data for estimating future profits
provide income information for tax filing
preserve an accessible record of transactions and sales
Here are 18 different types of invoices to consider when buying and selling goods and services:
1. Standard invoice
A standard invoice is a highly common type of invoice. You can create it using invoicing software. Many businesses use standard invoices because they're versatile. They use them for new, frequent, established or occasional clients. Standard invoices often include this information:
seller's name and contact details
the purchase order number or reference number
an itemised list of goods or services
sent and due dates
2. Recurring invoice
A recurring invoice is a repeat transaction document that an organisation delivers to the same customer periodically. A business that undertakes large projects can also use this invoice. Invoicing software can provide recurring invoice templates for your transactions. You can generate and send recurring invoices automatically to the same client on a specific date for each billing cycle. Choose a start date and pick the frequency, delivery options and duration for recurring invoices when creating them. You can schedule the solution to send recurring invoices monthly, weekly, biweekly, biannually, quarterly or annually.
3. Pro forma invoice
A pro forma invoice is a preliminary appraisal or estimated invoice requesting payment from a committed client for services or goods before supplying or providing them. International businesses often use pro forma invoices to help them get custom clearance quickly. While traditional invoices list specific information, pro forma invoices only need enough information to help customs agents examine the goods. Pro forma invoices can include these details:
an itemisation of products or services
the product's shipping weight
the nature of the service or product
any transportation fees
4. Debit invoice
A debit invoice is a record an organisation sends to a client to increase the amount they expect from the customer. Businesses can use a debit memo when a buyer misses the deadlines for early payment discounts. Organisations that charged a client for freight charges earlier and need extra funds can also use debit invoices. Freelancers can also use this document to adjust an existing bill. Debit invoices provide a record of the transaction. This trail can help organisations during audits and bookkeeping.
5. Credit invoice
A credit invoice is a record an organisation gives customers to provide them with a refund or discount. Businesses can also use a credit memo to rectify a previous invoicing mistake. A credit invoice includes a negative total number. For example, if a business provides a credit memo to a customer to detail a $50 refund, the amount on the credit invoice is -$50.
6. Mixed invoice
A mixed invoice combines debit and credit charges on the same invoice. The total amount can be a negative or positive number. For example, a business can use a mixed invoice when reducing the amount a customer owes for a project and increasing the amount the client owes from a separate undertaking it bills on the same invoice.
7. Commercial invoice
A commercial invoice is an export document that legally proves the sale transaction between the seller and the buyer. Entities mainly use it for custom clearance purposes. Users declare the value of imported goods, helping custom officials determine and assess duties and taxes payable. This invoice requires these details:
the name and address of the recipient of the goods
the invoice number
a customs reference number
terms of delivery and sale
an itemised description of the items sold
the unit price
the good's net weight
the invoice's total price
total commercial value
package marks (including the country of origin, company name, the package's destination and its weight and size)
8. Timesheet invoice
A timesheet invoice is a document organisations use to bill clients when employees execute their projects. Many employees are familiar with timesheets because their employers use them to track the lengths of their working hours, determining the amount to pay them. You can use pen and paper or a phone to track the time you spend executing a client's initiative.
9. Interim invoice
An interim invoice is a document you deliver to clients regularly as you execute their project. This invoice informs clients of the amount they owe businesses as they execute their large or extended projects. Organisations can send interim invoices to customers daily, weekly, monthly, quarterly or halfway through the project.
10. Final invoice
A final invoice is a document to show the client the total amount they owe the business. It's essential to discuss and modify all terms before issuing this invoice. The final invoice contains the records of previous transactions and the total payment amount due. Other essential details on the final invoice include:
names, addresses and contact information of the business and client
invoice date and due date
a breakdown of the costs
any discount offered
11. Past due invoice
A past due invoice is a document you deliver to clients who have delayed paying the amount they owe you. Some people know past due invoices as an overdue account notice or an interest invoice. Past due invoices include the total amounts due and any interest or late fees the client has accumulated.
12. Expense report
An expense report is an invoice that an employee gives an employer to reimburse business-related expenses. For example, an employee can invoice the organisation for the cost of parking, lunch or fuel they incurred while executing the company's duties. The organisation's accountants may verify the invoice before reimbursing the employee.
E-invoices are invoices that organisations deliver to clients through electronic means. Small businesses and freelancers often use e-invoices to bill their customers. E-invoices are easier and quicker to generate than standard print invoices. Online delivery can also reach their recipients quicker than sending hard copies. Electronic solutions may also provide platforms for clarifying and rectifying invoicing errors quickly.
14. Sales invoice
Sellers use sales invoices to inform buyers of the amount they owe them for goods purchased. The invoice also notes some payment terms to help clients plan their payments. They can also capture sales transactions, which are helpful when assessing your financial records. Businesses can give sales invoices while transactions are ongoing. Essential information to include in a sales invoice are:
name of the business
name of the buyer
date of sale
items the client bought
any discounts offered
the total amount owed
15. Purchase invoice
A purchase invoice is a document the business gives a client after concluding the transaction. It shows the services or items purchased and the client's debt to the business. The purchase invoice also confirms the transaction between the customer and business is valid. Here are essential details a purchase invoice can have:
the organisation's name
the client's name
the date of purchase
an itemised description of the goods or services
any discounts offered
the total amount owed
invoice and due dates
16. Collective invoice
A collective invoice is a document with one or more invoices. Organisations can use collective invoices if they sell various goods at different times to a client. Customers who often get collective invoices are those who buy frequently. A business can also provide these invoice types to clients and suppliers with long-term transactions with the business.
17. Self-billing invoice
A self-billing invoice is a document the buyer can produce to show the seller's debt. The two parties may set terms before creating an invoice. The buyer pays the seller once they get goods or services and the seller ratifies the self-billing invoice the buyer delivers.
18. Miscellaneous invoice
Miscellaneous invoices are documents the seller delivers to the buyer when the customer owes money for services like setup or shipping. These invoices suit quick financial transactions or adjustments to a previously issued invoice. You can have this type of invoice without including an invoice number.
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