If you are an aspiring entrepreneur, you must have wondered “what is invoice and types of invoice” that are out there. While your employees are busy taking orders and communicating with customers, you should focus on what types of billing suit your company. If you want your business to run like clockwork, you must pay due attention to invoicing types, which may differ depending on the purpose of the billing.
Types of invoice payment may differ depending on the following:
- Payment period
- Project completion dates
- Industry features and so on
There is nothing complicated to understand invoice type meaning. This document contains all the necessary information about the services, total amount, and payment terms. In the meantime, what should the invoice look like if a client has already made an advance payment or asks for deferred payment for several weeks?
That is why you need to know how many types of invoices exist and which one should be sent to a client in this or that case.
What Are the Different Types of Invoices?
As a businessman, you must have encountered various situations where invoices had different names and purposes. Below you will find the six most common types of invoices and understand what are the types of invoices that can be used in a particular situation:
- Recurring invoice. We are talking about recurring invoices you send customers on specific calendar days.
- Credit memo. Do not rush to charge a client an advance payment. It will be easier if a buyer receives a credit memo invoice and confirms the debt to your company for the services rendered.
- Interim invoice. This is an excellent tool for a large project with a final large amount. It will be easier if you divide a large payment into several parts. Once you complete a piece of a project, you can issue an interim invoice to a client and continue work after receiving payment.
- Pro forma invoice. This form of the invoice is nothing more than a provisional invoice. Essentially, pro forma invoice templates are used to agree on a preliminary amount for services to be rendered. As a rule, small businesses often use this type of invoice before starting work.
- Past due invoice. As you might have guessed from the name, this refers to invoices sent to customers after they are past due. It is recommended to send past due invoices immediately after a client has not fulfilled his obligations under the previous invoice and violated the payment terms. Use Invoice Maker by Saldo Apps to automate sending Past due invoices.
- Final invoice. This invoice is sent to a customer after all work scope has been completed in full.
Essential Parts of An Invoice
Even though the invoice has various formats, certain things are contained in almost every paper, regardless of its type:
- Invoicing date
- Contact details of your company
- Client information
- A detailed list of goods purchased or services rendered
- Total payment amount
- Payment terms
- Invoice number