Types of Invoices for Small Businessadmin_logicfusion
As a small business owner, you create and send hundreds of Invoices (customer bills) every month after you provide a service or sell the products. There are several industries outside, and there numerous types of invoices.
The invoice type you choose depends on your industry. Depending on your business industry, clients, and the products & services you offer, the invoices will be different from one another.
An invoice for the retail company is not necessarily the same as the finance company’s Invoice. It is because invoices depend on the services or products they provided on basis of time, hourly or daily, and the products bought or sold.
What is an Invoice?
An invoice is a document sent to the buyer with a list and cost of the products & services delivered by the seller. It also specifies the amount and records the transaction between a buyer and seller.
Different types of Invoices for small businesses
Let us look into the major types of invoices that are used in day-to-day businesses. You can choose from them according to your business industry and clients.
Generally, an invoice is issued after the delivery of the products or services or both. In some cases, buyers ask for the details that what to expect from the delivery before completing the work. In this case, the pro forma invoice comes on board; a Pro Forma invoice can be called a pre-invoice.
This invoice shows the estimated amount buyer has to pay once you deliver the product or provide the services. It’s just an estimated amount and may be subjected to change; this is not added to the accounts receivables in the company book records.
Interim invoice, this type is used when you deal with time-consuming and larger projects where you spend more money on labor, materials, and other operating expenses. Interim Invoice is also known as progressive invoice, divides the total cost of the products or services into multiple smaller amounts.
This invoice helps small businesses to manage their cash flow while working on long-term projects. It reduces the risk of not getting paid as business and clients sign an agreement and are bound to terms that include multiple payments.
As the name says, it is the invoice which is sent to the buyer after the work or project is done. It tells the customer that the work has been done, and it includes:
- The list of the items delivered or services provided
- The total cost of the products
- Invoice number
- Invoice due date
- Payment methods
Recurring Invoice is useful for the businesses which are the subscription-based model or the businesses that charge the same amount every month or periodically for their services.
Commercial Invoice is issued by the business for the products or goods that are sold internationally. The details on a commercial invoice include:
- Country of origin
- Country of destination
- Shipment quantity
- Weight or volume of the goods
- Description of products
- Packaging format
Time Sheet Invoice
Time Sheet Invoice is used by the businesses when the business or employees are charged on an hourly basis for their work. Some of the jobs, where are employees are charged per hour are – freelancers, attorneys, Business Consultants, Virtual Assistance, psychologists, and others. The elements or a detail that contain in the Timesheet invoice includes:
- Total hours worked
- Hourly rate
- Date and days they worked
Past Due Invoice
Sometimes, the client might have forgotten to make the payments. In those cases, businesses have to immediately send the Past due Invoice, this helps customers to remind the payment due date has passed. It includes the prior invoice information as well as any late fees and interest charges for delay in payment.
A credit invoice is used when the business wants to offer a discount or refund or make a correction in past invoicing errors, in which you owe the buyers money. A credit Invoice is also known as a credit memo. Credit memo always has a negative total number.
For example, if you provide a credit memo of $70 then the total amount on the credit invoice will be -$70.
A debit invoice is used when clients owe the money to the business. Debit invoice is also known as Debit memo.
Suppose if the business worked more hours than the estimated time, then the business can send the debit invoice to the client on the extra hours spent.