The Different Types of Invoices: A Comprehensive Guide

Invoices are a vital part of any business's financial management and are used to request payment for goods or services. Companies can use several different types of invoices, each with its unique features and purposes.

Pro forma invoice

A pro forma invoice is a preliminary invoice used to confirm the details of a sale before it is completed. It is often used in international trade to provide an estimated cost of goods or services and to secure financing or payment.

When to use a pro forma invoice:

• When selling goods or services internationally: A pro forma invoice can provide an estimated cost of goods or services to a foreign buyer and secure payment or financing before the goods or services are shipped.
• When requesting a deposit: A pro forma invoice can be used to request a deposit from a buyer before goods or services are delivered. This can help to secure payment and reduce the risk of non-payment.
• When providing a quote: A pro forma invoice can provide a quote for goods or services to a potential customer. It can include an estimated cost and any applicable taxes or fees.
• When negotiating terms: A pro forma invoice can be used as a negotiating tool to help determine the final terms of a sale, such as a price, delivery date, and payment terms.

Pro forma invoices are not legally binding and do not constitute a formal payment request. They are often used as a preliminary step in the sales process to confirm the details of a transaction before it is finalized.

Commercial invoice

A commercial invoice is a document that outlines the goods or services being sold, the price of those goods or services, and any applicable taxes or fees. It is used in domestic and international trade to provide a transaction record and facilitate payment.

When to use a commercial invoice:

• When selling goods or services: A commercial invoice is used to request payment for goods or services sold. It includes the transaction details, such as the goods or services provided, price, and applicable taxes or fees.
• When importing or exporting goods: A commercial invoice is often required for customs purposes when importing or exporting goods. It includes the details of the transaction, such as the value of the goods, the country of origin, and any applicable duties or taxes.
• When requesting payment from a customer: A commercial invoice can be used to request payment from a customer for goods or services that have been provided. It includes the details of the transaction and the total amount due.
• When providing proof of purchase: A commercial invoice can serve as proof of purchase for goods or services and can be used to support a warranty claim or other legal action.

Purchase order invoice

A purchase order invoice is used to request payment for goods or services that have been ordered but not yet delivered. It is typically used in business-to-business transactions and includes the details of the purchase order, the goods or services being provided, and the total amount due.

When to use a purchase order invoice:

• When fulfilling an order: A purchase order invoice is used to request payment for goods or services that have been ordered but not yet delivered. It includes the details of the purchase order and the total amount due.
• When there is a delay in delivery: If the delivery of goods or services is delayed, a purchase order invoice can be used to request payment for the portion of the order that has been completed.
• When there are multiple deliveries: If an order is being fulfilled in multiple deliveries, a purchase order invoice can be used to request payment for each delivery as it is completed.
• When there are multiple invoices for a single purchase order: If a single purchase order involves various invoices, a purchase order invoice can be used to request payment for each invoice as it is generated.

Service invoice

A service invoice is used to request payment for services that have been rendered. It includes the details of the services provided, the rate charged, and the total amount due.

When to use a service invoice:

• When providing professional services: Service invoices are commonly used by professionals, such as lawyers, accountants, and consultants, to request payment for their services. They include the details of the services provided, the rate charged, and the total amount due.
• When providing repair or maintenance services: Service invoices can also be used by companies that offer repair or maintenance services, such as HVAC technicians or car mechanics. They include the details of the services provided, the rate charged, and the total amount due.
• When providing services on a contract basis: Service invoices can be used by companies that provide services on a contract basis, such as cleaning services or landscaping services. They include the details of the services provided, the rate charged, and the total amount due.
• When providing services on a recurring basis: Service invoices can be used by companies that provide services on a frequent basis, such as subscription-based services or monthly maintenance services. They include the details of the services offered, the rate charged, and the total amount due.
  

Recurring invoice

A recurring invoice is an invoice that is issued on a regular basis, such as monthly or quarterly. There are many benefits of recurring inoices and they're often used for subscription-based services or for services that are provided on a recurring basis.

When to use a recurring invoice:

• When providing subscription-based services: A recurring invoice can be used to request payment for subscription-based services, such as a monthly gym membership or a quarterly magazine subscription. It includes the details of the services provided, the rate charged, and the total amount due.
• When providing services on a recurring basis: A recurring invoice can be used to request payment for services that are provided on a regular basis, such as monthly landscaping services or quarterly pest control services. It includes the details of the services provided, the rate charged, and the total amount due.
• When billing for usage-based services: A recurring invoice can be used to request payment for usage-based services, such as utilities or internet service. It includes the details of the services provided, the rate charged, and the total amount due.
• When billing for rent or lease payments: A recurring invoice can be used to request payment for rent or lease payments, such as monthly rent for a rental property or quarterly lease payments for equipment. It includes the details of the payment due and the total amount due.

Credit invoice

A credit invoice is used to request a credit for goods or services that have been returned or not delivered as expected. It includes the details of the credit request, the amount of the credit, and any applicable credits or adjustments.

When to use a credit invoice:

• When returning goods: A credit invoice can be used to request a credit for goods that have been returned to the supplier. It includes the details of the goods being returned, the original purchase price, and the amount of the credit is requested.
• When goods are not delivered as expected: If goods are not delivered as expected, such as if they are damaged or defective, a credit invoice can be used to request a credit for the portion of the order that was not delivered.
• When services are not provided as expected: If services are not provided as expected, such as if they are incomplete or unsatisfactory, a credit invoice can be used to request a credit for the portion of the services that were not provided.
• When there are credits or adjustments to be applied: A credit invoice can be used to request credits or adjustments to be applied to an account, such as if there was a mistake on a previous invoice or if a discount was not involved.

Self-billed invoice

A self-billed invoice is an invoice that is issued by the recipient of goods or services rather than the supplier. It is often used in business-to-business transactions and includes the details of the goods or services being provided and the amount due.

When to use a self-billed invoice:

• When the recipient of goods or services is registered for value-added tax (VAT): In some cases, the recipient of goods or services may be registered for VAT and may be responsible for paying the VAT on the goods or services received. In these cases, the recipient may issue a self-billed invoice to request payment for the VAT due.
• When the supplier is not registered for VAT: In some cases, the supplier of goods or services may not be registered for VAT. In these cases, the recipient may be required to self-bill for the VAT due on the goods or services received.
• When the supplier is not based in the same country: If the supplier of goods or services is not based in the same country as the recipient, the recipient may be required to self-bill for the VAT due on the goods or services received.
• When the recipient is responsible for collecting and remitting VAT: In some cases, the recipient of goods or services may be responsible for collecting and remitting VAT on behalf of the supplier. In these cases, the recipient may issue a self-billed invoice to request payment for the VAT due.

Debit invoice

Also known as a debit note, it is a document that is used to request a reduction in the amount due on a previously issued invoice. It includes the details of the adjustment being requested, such as the reason for the adjustment and the amount of the adjustment.

When to use a a debit invoice:

• When there is an error on a previously issued invoice: If there is an error on a previously issued invoice, such as a calculation error or a mistaken charge, a debit invoice can be used to request a reduction in the amount due to correct the error.
• When there is a credit to be applied: If there is a credit to be applied to a previously issued invoice, such as a discount or a credit for returned goods, a debit invoice can be used to request a reduction in the amount due to reflect the credit.
• When there is a change in terms of a contract: If there is a change in terms of a contract, such as a change in the price of goods or services, a debit invoice can be used to request a reduction in the amount due to reflect the change.
• When there is a change in the number of goods or services: If there is a change in the number of goods or services being provided, a debit invoice can be used to request a reduction in the amount due to reflect the change.

Credit Invoice

A credit invoice, also known as a credit note, is a document that is used to request a credit for goods or services that have been returned or not delivered as expected. It includes the details of the credit request, the amount of the credit, and any applicable credits or adjustments.

When to use a credit invoice:

• When returning goods: A credit invoice can be used to request a credit for goods that have been returned to the supplier. It includes the details of the goods being returned, the original purchase price, and the amount of the credit is requested.
• When goods are not delivered as expected: If goods are not delivered as expected, such as if they are damaged or defective, a credit invoice can be used to request a credit for the portion of the order that was not delivered.
• When services are not provided as expected: If services are not provided as expected, such as if they are incomplete or unsatisfactory, a credit invoice can be used to request a credit for the portion of the services that were not provided.
• When there are credits or adjustments to be applied: A credit invoice can be used to request credits or adjustments to be applied to an account, such as if there was a mistake on a previous invoice or if a discount was not applied.

Timesheet Invoice

A timesheet invoice is a document that is used to request payment for services that have been provided on an hourly basis. It includes the details of the services offered, the number of hours worked, and the rate charged.

When to use a timesheet invoice:

• When providing services on an hourly basis: A timesheet invoice is commonly used by professionals, such as consultants, contractors, and freelancers, to request payment for their services on an hourly basis. It includes the details of the services provided, the number of hours worked, and the rate charged.
• When billing for overtime: If an employee works overtime, a timesheet invoice can be used to request payment for the additional hours worked. It includes the details of the overtime hours worked and the rate charged.
• When billing for part-time or casual work: If an employee works on a part-time or casual basis, a timesheet invoice can be used to request payment for the hours worked. It includes the details of the hours worked and the rate charged.
• When billing for project-based work: If a project is being completed on an hourly basis, a timesheet invoice can be used to request payment for the hours worked on the project. It includes the details of the project, the hours worked, and the rate charged.

Interim Invoice

An interim invoice is an invoice that is issued before the completion of a project or the delivery of goods or services. It is used to request payment for the portion of the project or goods or services that have been completed to date.

When to use an interim invoice:

• When completing a project on a milestone basis: If a project is being completed on a milestone basis, an interim invoice can be used to request payment for each milestone as it is reached.
• When completing a project on a percentage basis: If a project is being completed on a percentage basis, an interim invoice can be used to request payment for the portion of the project that has been completed to date.
• When providing goods or services on a partial delivery basis: If goods or services are being provided on a partial delivery basis, an interim invoice can be used to request payment for the portion of the goods or services that have been delivered to date.
• When there are multiple invoices for a single purchase order: If a single purchase order involves multiple invoices, an interim invoice can be used to request payment for each invoice as it is generated.

Regular (Standard) Invoice

A regular invoice, also known as a standard invoice, is a document that is used to request payment for goods or services that have been sold. It includes the details of the transaction, such as the goods or services being provided, the price, and any applicable taxes or fees.

When to use a regular invoice:

• When selling goods or services: A regular invoice is used to request payment for goods or services that have been sold. It includes the details of the transaction, such as the goods or services being provided, the price, and any applicable taxes or fees.
• When requesting payment from a customer: A regular invoice can be used to request payment from a customer for goods or services that have been provided. It includes the details of the transaction and the total amount due.
• When providing proof of purchase: A regular invoice can serve as proof of purchase for goods or services and can be used to support a warranty claim or other legal action.
• When billing for a one-time transaction: A regular invoice can be used to request payment for a one-time transaction, such as the sale of a single product or the provision of a one-time service.

Consolidated Invoice

A consolidated invoice is an invoice that combines multiple invoices or charges into a single document. It is often used to simplify the billing process and to make it easier for the recipient to track and pay the charges.

When to use a consolidated invoice:

• When there are multiple invoices for a single customer: A consolidated invoice can be used to combine multiple invoices for a single customer into a single document. This can make it easier for the customer to track and pay the charges.
• When there are multiple charges for a single project: If a project involves multiple charges, such as for materials, labor, and expenses, a consolidated invoice can be used to combine the charges into a single document.
• When there are multiple invoices for a single purchase order: If a single purchase order involves multiple invoices, a consolidated invoice can be used to combine the invoices into a single document.
• When there are multiple charges for a single service: If a service involves multiple charges, such as for parts and labor, a consolidated invoice can be used to combine the charges into a single document.

You can use different invoice at different times, depending on the situation. Just make sure that your invoice numbers are configured correctly to prevent issues.

Happy invoicing!