Many small businesses use the standard invoice in their daily operations. Although this does help cover a lot of ground for most industries, there are many small businesses, especially in eCommerce, that require more specific types of invoices.
To the new entrepreneur, the vast amount of invoices may seem overwhelming; however, they really don’t have to be.
That’s why today we’ll look at the most important small business invoices based on the industry and how to use them.
1. Proforma invoices
The first way that proforma invoices are generally used is so that customs can see the value of all the goods being imported. It is important to remember, however, that the proforma is not an actual invoice (seeing as there is no request for payment for goods already delivered), so they don’t include any tax.
The second way is a type of estimate. This is usually in the case when a business has a new customer, and the relationship isn’t established yet. The seller will send the proforma as a sort of preview of what the final cost of the goods will be.
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2. Commercial invoices
Similar to the above-mentioned proforma invoice (besides the fact that the commercial invoice is a finalized document), they both can, in fact, be used for customs. However, they should not be used at the same time, and the commercial invoice is preferred.
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3. Credit notes (memos)
This mistake could be that:
- the products were somehow damaged
- the products or services were not satisfactory
- the seller initially charged more than what was agreed
- the appropriate discounts were not applied
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4. Timesheet invoices
This invoice applies to those businesses or services that provide work based on hourly pay. Instead of having to submit separate documents, one that lists the hours and the other being the invoice, the seller (vendor) can put the hourly data directly on the invoice.
Beyond the standard information found on standard invoices, the timesheet invoice will include:
- personal details as well as any applicable ID number
- the days and hours that the vendor worked each day
- the total number of hours worked, as well as the rate per hourly and total of the invoice
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5. Self-billing invoices
Instead of the customer needing to wait to receive the invoice from the seller before he can pay for it, the customer actually issues the invoices to himself.
Once the buyer gets the products or services, he will create the invoice and issue one copy to his accounts payable. The other copy goes to the supplier.
Different countries around the world have different regulations for these self-billing invoices. For example, in the UK, if businesses want to start using these, both the seller and customer have to be VAT registered.
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6. Progress invoices
Instead of having to wait until the project is completed and then being paid, the vendor will send invoices at different phases of the larger project.
The progress invoice will usually include the initial contract amount plus what has already been paid by the client. It should also show how much is already finished, the total due for the currently completed stage, and how much is remaining for the whole project.
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7. Recurring invoices
Recurring invoices will allow the supplier to submit invoices on a regular date and for a regular amount. For SaaS companies, these charges are the same amount each month. They also normally have the customer’s permission to charge their account automatically. In this way, the client has to do no work to pay for these invoices.
It is incredibly convenient for both sides.
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Final Words
This article is written by Bernard Meyer. He is the Head of Marketing at InvoiceBerry, the online invoicing software committed to helping small business owners send out invoices quickly and professionally. You can also find him on Twitter and LinkedIn.