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Types of invoices in business

types of invoices

There are several types of invoices depending out there. According to Investopedia.com an invoice is a ‘commercial document that itemizes and records a transaction between a buyer and a seller.’ An invoice is basically issued to request for compensation for goods or services offered. The type of invoice sent depends on the business type and/or services offered

An effective invoicing system gives you and your clients flexibility hence convenience.
Discussed below are some types of invoices in a business.

Types of Invoices

1. Proforma Invoice

This is a pre-invoice. Usually sent before completing a job for a client. It shows what the client is expected to pay once you deliver the product or complete the service for them.

It usually estimates the amount of work to be done or services to be provided and the amount expected for each.

2. Interim Invoice

Majorly used in large projects. Sent when the project is ongoing, majorly to maintain a cash flow while still providing the services instead of paying a lumpsum. Breaks own the services and/or equipment to allow easy accounting for you as the service provider.

3. Final Invoice

This is a demand for payment, unlike the pro-forma invoice. It lets the customer know that the services/products/ project have been delivered, hence they should pay.

In the invoice, make sure to clearly indicate each item and it’s cost, total cost payment methods available and the due date.

4. Past Due Invoice

This is usually sent when the final invoice is past due. Ensure that you include all that was present in the final invoice and any penalties or charges that may have been accrued.

5. Recurring Invoice

Sent by service providers who offer ingoing services such as utility bills. Also, they work well for customers with ongoing services like membership, system subscriptions. In these instances, you and the client agree on the price and when they will be billed.

6. Credit Memo

This is usually sent to the client to decrease the amount on a previously sent invoice. This may happen if the client was overcharged, they returned some goods or some goods were damaged, among other instances.

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