If you’re a freelancer, contractor, or business owner, you know how crucial it is to invoice your clients. It helps keep your money flowing and your business operating.
There are many types of invoices that you can make for your clients, and the type of invoice you select will depend on your industry, how you bill your customers, and how frequently you plan to get compensated.
This guide will show you the different types of invoices. At the end of this article, you will learn what type of invoice you should choose for your business.
The Different Types of Invoices
Standard Invoice
A standard invoice is the most common type of invoice that many small businesses make. It is basically what you issue and submit to a client. The format is flexible and fits various industries and business cycles.
While the design comes in variety, standard invoices contain essential information such as:
- Business information (name and contact details)
- The client’s information (name and contact details)
- Invoice number
- Invoice date
- An itemized list of the products and services rendered by the business
- Price per item and sub-total
- Discounts and fees (if applicable)
- Charged taxes
- Total amount payable
Our guide, How to Write An Invoice With Spark will help you learn more about standard invoices and how you can write one.
Credit Invoice
Also called a credit memo, a credit invoice is another critical document, particularly for providing a client a refund or a discount. Businesses also issue a credit memo to correct a previous invoicing error. A credit memo will always include a negative total number.
For instance, if you’re issuing a credit memo to a customer to detail a $60 refund, the total on the credit memo would be -$60. Do not confuse a standard invoice with a credit invoice. A standard invoice shows an itemized bill by a business against the services or products offered. In contrast, a credit invoice is a promissory note provided to customers in exchange for returned orders.
A credit invoice is a useful tool in any business — big or small — both to sellers and buyers. You can use credit invoice in different scenarios such as:
Returned goods
If a client returns products for which they have been previously billed, you must issue a credit memo to correct the amount due from the customer.
Pricing disputes
There are times when a buyer contests the price they are billed. You can resolve this issue by making an informal agreement, binding mediation, or a legal proceeding. If both parties agree with a price reduction in the original invoice, then you must issue a credit invoice.
Promotional discounts
You can issue a credit invoice to a client or customer you wish to give a discount who has already been billed.
Errors with the original invoice
You might make mistakes when creating invoices. If an issued invoice has an error, you can issue a credit memo to correct the situation.
Debit Invoice
Also called a debit memo, a debit invoice is issued by a business to correct the amount billed to a client. It essentially states how much more the client has to pay for the company. Freelancers and small businesses can use debit invoices when they need to make adjustments to an existing invoice.
For example, suppose a freelancer sent a client an invoice based on estimated hours and end up working additional hours for a project. In that case, the freelancer can send the client a debit invoice for the additional billable hours. Credit invoices are always written in negative numbers, while debit invoices are written as positive numbers.
You can use debit invoices in different situations. Another example is when a client misses the deadline for the early payment discount but deducts the discount anyway, you can issue a debit invoice for the discount amount. Also, if you paid for the freight charges for the client, you may issue a debit invoice for the freight charges.
In a debit invoice, you’re essentially increasing the accounts receivable for the debit invoice amount and escalating revenue. On the other hand, the buyer increases his accounts payable to pay the amount stated in the debit invoice, increasing their expenses.
Timesheet Invoice
Contract employees who are paid hourly by their employer use a timesheet to indicate their billable. Hence, a timesheet invoice is for freelancers who bill their clients based on the hours worked on a project. If you’re a freelancer, you may use a timesheet invoice to bill your customers.
Timesheet invoices are common in several industries where clients are billed hourly, including:
- Psychologists
- Business consultants
- Lawyers
- Creative agencies
Timesheet invoices can be easily made using Excel or Word. You can also find free timesheet invoice templates online.
Commercial Invoice
Another type of invoice is the commercial invoice issued by a business for goods that it sells to international customers. Commercial invoices state the sale details that are necessary to determine customs duties, especially for cross-border sales. Some of the important information to include are the following:
- Description of goods
- Weight or volume
- Shipment quantity
- The total value of goods
- Packaging format
Commercial invoices are essential to determine the taxes and duties required for a package to clear customers. For this reason, it’s one of the most important documents when shipping goods across different countries. A commercial invoice is used as a customs declaration that you, the business owner, export an item across international borders.
Pro Forma Invoice
A pro forma invoice is another type of invoice that’s a preliminary bill of sale issued to customers in advance of delivery of items. The invoice contains information about the purchased items and other important details, including the transport charges and shipping weight.
Pro forma, which is Latin for as a matter of form, invoices are usually necessary when it comes to international transactions, especially for customs purposes when importing goods. Most pro forma invoices provide the customer with an accurate sale price.
Like other invoices, there are no specific guidelines dictating the exact format or design of a pro forma invoice. Further, a pro forma invoice may be altered once a project or shipment is complete to accurately reflect the total payable amount of the shipped goods or services rendered.
Final Invoice
A final invoice is issued to a client to request payment for a completed project. The final invoice is usually more detailed than a pro forma invoice. Like a standard invoice, a final invoice includes the following information:
- An itemized list of goods and services rendered
- The total payable amount or cost of the project
- Invoice number
- The invoice date (the date of which the invoice is issued)
- Invoice due date
- Payment channels accepted
Past Due Invoice
You may send your client a past due invoice if they don’t provide the payment by the due date indicated on the final invoice. You must send past due invoices to your clients as soon as they miss their payment deadline. Past due invoices contain information on the services or goods provided, as well as the payment details listed on the final invoice. A past due invoice may include interest charges or late fees, if applicable.
Sales Invoice
Another type of invoice for freelancers and business owners is the sales invoice—a document that a business sends to a customer or client to request payment for the items or services. A sales invoice contains descriptions of the services or products sold, the quantity, and the price. Sales invoices are not always necessary but they are essential for record-keeping. They can also serve as an official record of a sale for both the seller and buyer.
Bill Your Clients Using Spark Invoice Maker
Creating invoices is fast and easy with Spark Invoice Maker. Our invoice generator enables you to make professional and sleek sales invoices in a matter of seconds. Using Spark is far from being complicated. All you need to do is enter your business information, your client’s details, a list of goods or services you sold, and their prices.
Well-formatted invoice
Spark Invoice Maker generates a well-formatted invoice that you can be proud of! The best part is that you can mark it with your company logo to resonate with your brand. You don’t need to worry about opening a word processing software and formatting a table—Spark does all of that for you. All that’s left to do is fill in the necessary fields, and Spark will generate an invoice that you can send to your clients instantly.
Make invoices wherever, whenever
Running a business is not a walk to the park. There’s so much to do and to take care of. You need an invoice maker that lets you generate invoices within minutes. We designed Spark Invoice Maker for workers and sellers that are always on the go. Use Spark Invoice Maker wherever and whenever you need it.
Create and send
Once Spark has generated your invoice, you can send it directly to your client via email or text message. Spark supports major messaging platforms, ensuring your clients receive your invoice instantly.
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