What Are the Different Types of Invoices?
The invoice is an essential part of any commercial activity, as it ensures sellers receive the correct payment for the goods and services they offer. It's a common and useful practice, no doubt.
But to be even more efficient, it's essential to choose the right invoice for your business. The good news is there are many types of invoice templates you can use to create an accurate and personalized invoice.
Accuracy and efficiency are even more important for small businesses, where every due amount matters. If you are a small business owner, you have quite a variety of invoice options, depending on your industry and the way you organize your activity.
Types of Invoices for Small Business
Below you will find an overview of the different types of invoices available and what each of them should contain. That way, you can decide what invoice type better suits your business' needs.
The standard invoice is the most common and frequently used formal invoice. It's the basic bill you can issue to your clients to let them know what they owe you and the deadline.
It has the advantage of being quite flexible, so you can adapt it to your particular necessities. The standard invoice can be used in many industries, even with different billing cycles.
The credit invoice is the formal invoice you can try when a client needs a refund or you want to offer them a discount. It's also the tool you use if one of your previous invoices had an error that you need to correct.
You can turn to the credit invoice to update the amount after a pricing dispute, which was settled by reducing the initial price.
The debit invoice is one of the types of invoice you can use to increase a certain client's due amount. For instance, if the initial invoice you issued was based on an estimation and you later determine the client owes you more, this is the invoice you need to issue to update the total amount.
The mixed invoice is one of the flexible invoice types, given that you can use it to combine credit and debit charges in a single document. Mixed invoices aren't used that frequently by small businesses.
But if you are performing two separate services for a particular client and you need to raise the cost on one project and reduce it on the other, this is the format you can use.
The commercial invoice is a more detailed invoice that you can use if you are shipping goods internationally. It contains more information because customs agents will use this bill to determine the fees. So apart from the usual elements, it also includes details like quantity, weight and volume, or how the goods are packed.
Timesheet invoices are used when billing is done according to the number of hours performed and the standard rate. They are usually used by companies that bill by the hours, like lawyers, consultants, or psychologists.
The pro forma invoice is used to estimate future costs before the project actually begins.
Interim invoices are sent to charge for completed milestones during a project. Even a small business can have a longer project, and receiving multiple payments can help maintain a healthy cash flow.
The final invoice is the billing document you send when the project is completed to communicate the total and updated amount that the client owes you.
The past due invoice is the document you send if the due date passed and the client still hasn't made the payment.
Common Elements on Different Types of Invoices
According to the exact purpose you want your invoice to fulfill, the sections it includes may differ. But there are a few elements that any formal invoice needs to have.
This is the basic information you need to make sure to include in any invoice type:
- A branding element, like a logo
- Your business' name and contact information
- Your client's name and contact information
- The unique number you have assigned to that particular invoice
- The description of the goods or services you provided, with individual costs
- The total amount due and the deadline
- Payment terms and accepted methods
Starting from these primary sections, you can make some adjustments to ensure all the relevant aspects are covered.
Why Do You Need to Use Invoices?
An invoice or bill is a commercial document used to notify the client of the amounts due for the goods or services they purchased. That's the primary function, but the fact is invoices help your business in several ways.
First, they establish good communication with your client. They offer all the information they need to make the payment and avoid delays. Then, a well-written invoice helps you maintain a professional image, which is essential.
All types of invoices are crucial when it comes to managing your accounting. If you invoice correctly, you can record all transactions and have all the data ready for tax season. On top of that, invoices help you keep track of outstanding or overdue payments, so you can avoid receiving your money with significant delays.
Conclusion
There's no doubt that invoices are essential if you want your activity to run smoothly and to receive your payments on time. The fact that there are several types of invoices makes it even easier to personalize the document according to your business' particularities.
Still, you need to make sure your invoice is well written and that you don't miss any important elements. The best way to do that is by using the invoice templates created by WeInvoice. Check out the software to see all the user-friendly templates you can try, as well as the handy invoice generators.