The 6 Most Important Invoices Your Business Needs

Around the world, many small businesses use the standard invoice in their daily business operations. However, there are many different types of business areas, and they require the use of different types of invoices.

While the amount of non-standard invoices can seem quite overwhelming, they are actually simple to understand and use.

That’s why today we’ll look at the 6 most important types of invoices your business may need to use and how to use them.

Proforma Invoices

The proforma invoice is one of the most popular non-standard invoices. It is generally used in one of two ways.

First, it can be used for customs to declare the value of a trade.  However, it should be remembered that the proforma is not an actual invoice, as it isn’t a request for a payment for goods or services already delivered. Therefore, the proforma does not include tax.

Secondly, it can be used as a sort of estimate or quote, especially in the case when a seller has a new client. The seller will send the proforma to show what the price of the goods and services will be.

In the case of the second usage, any business can use a proforma invoice.

Commercial invoices

The commercial invoice is used specifically for imports. For this reason, this invoice is only applicable for small businesses that sell goods internationally.

It is in some way similar to a proforma invoice. At customs, actually, you may present a proforma invoice if a commercial invoice is not present, although you should not present both.

The commercial invoice, however, is a finalized document and is preferred. It is used to assess exactly what duties and taxes should be applied to the goods being shipped.

Credit notes

The credit note is a type of document that can be applied to all businesses. It is submitted by the seller when an error has been made on the original invoice and a refund has to be issued in some form.

It could be a monetary refund or credit for a future purchase. The errors usually come in the following forms:

• the goods were damaged while in transit
• the goods or services were not up to the buyer’s standards
• the seller charged more than what was agreed upon
• the correct discount was not applied

Timesheet invoices

The timesheet invoice can best be viewed as a combination of a timesheet and an invoice.  It is specifically for those sellers or vendors that work on an hourly basis for their clients.

The timesheet invoice lets the vendor record directly on the invoice how many hours were worked and helps reduce the amount of paperwork needed to be filed.

For the timesheet invoice, the following parts are normally needed:

• the vendor’s information, including any applicable ID numbers
• the dates and times worked each day
• the total amount of hours, including the hourly rate
• the total amount owed for the invoice

Self-billing invoices

The self-billing invoice is not a specific type of invoice for a certain industry. In fact, it’s a way of invoicing, more of a process. In self-billing, the buyer actually issues the invoice to himself, rather than h having to wait for the seller to create and send it.

After receiving the goods or services, the buyer will create the invoice and issue it to his accounts payable department. He will also send a copy to the seller for his accounts receivable.

In this way, the time is really cut down that a buyer would normally have to wait for an invoice. Even more than that, the risk of mistakes on the invoice is greatly minimized seeing as the buyer is making his own invoice.

Self-billing is gaining ground across the world. However, different regions may have different regulations surrounding it. For example, in the UK, in order for self-billing to be arranged, both the buyer and seller have to be VAT registered.

Progress invoices

A progress invoice involves those sellers or vendors involved in long-term projects, although it is normally tied to the construction business.

Instead of having to wait until the entire project is finished to get paid (which could take months or even years), the vendor will issue invoices at different stages.

The progress invoice will include:

• the amount of the original contract
• the amount that has already been paid by the customer
• the percentage of work already completed in total
• how much is currently due and the amount remaining for the entire project

With progress invoicing, the customer has a chance to determine if the work is satisfactory, rather than paying the entire amount or a huge percentage upfront. In this way, both sides are satisfied.

These are of course only some of the many different types of invoices available for businesses. However, these are the most popular and your business may benefit from using one or more of these.