What are the Different Types of Invoices for Small Businesses?
In this article, we will understand about the different types of invoices.
Last updated
In this article, we will understand about the different types of invoices.
Last updated
You can create invoices according to your business. Each type of invoice has a specific purpose. Let us understand the following Invoices
Commercial Invoice - This invoice is issued only when there is no order for the issuance of a tax invoice. In the case of export, the exporter issues a commercial invoice to the importer containing the payment terms and shipment details.
Pro forma invoice - You can think of a pro forma document like a pre-invoice. It is not a demand for challan payment. You send a pro forma invoice to the client before the work is done. A pro forma invoice tells customers how much you'll need to pay once the product or service is delivered. You can also use a pro forma invoice to show the value of items you offer as a gift. This gives an estimate of how much work you will do and how much the items will cost. Pro forma invoice terms may change as the project progresses.
Interim invoice - Interim invoices are used to break down a large project into smaller payments, which can benefit both you and your customer. You can set up interim invoices to follow a regular schedule, or send them out when you complete specific portions of a larger project.
Recurring invoice - Use recurring invoicing to bill customers for ongoing services. You charge the same amount over some time as some utility bills. If your customers have subscriptions to your company, you can use recurring invoices.
Final invoice - As you would know from the name, this is your last invoice for a customer. This invoice has everything like what you have done for your clients and their dues which are due.
Past due invoice - Some customers do not pay you by the due date of the last invoice. Whenever this happens you will have to send past due invoices. Past due invoices remind customers that their payment due dates have passed.
Credit memo - The credit memo is issued when the balance outstanding on the existing invoice is to be reduced. It is used when a business or individual cannot deliver the goods or services promised in the outstanding invoice.
Debit memo - When you use a credit memo to issue adjustments to your customer's invoices, to let them know that you under-billed them. Otherwise, these invoice modifications function largely the same. The entire purpose of these memos, whether credit or debit, is to track invoice adjustments for both you and your customers' bookkeeping. These memos can also serve as proof of adjustments to your taxes or if any other disputes arise in the future.
Disclaimer: This article is intended for general consumption only. The information in the article was accurate at the time of publication, but it is subject to change due to changes in government rules and regulations. The contents of the blog may not be copied unless prior permission is obtained.
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