The Top 6 Most Common Onlive Invoice Types and Their Functions
An invoice is a concise documentation detailing a transaction between multiple parties. These transactions can be between two individuals, an individual and a company, or even two companies. Invoices not only show how much the sale was worth, but other information such as date, time, itemized lists of products or services provided, and purpose.
Different types of invoices are used for various purposes. Certain invoice types are better for large companies, and others are made especially for invoicing for small businesses. The six most popular online invoice types are outlined for you below.
This is the most common type of invoice you’ll find. These invoices can be as straightforward or as lengthy as the client or business wants to make them. The purpose of a standard invoice is to keep a record of all of the money going in and out of any business.
At the very least, the information contained in these invoices should include names and contact information, the amount of the sale, and a serialized invoice number. To optimize your invoice, adding lists and price breakdowns is extremely helpful to both businesses and customers.
Another name for this kind of invoice is a credit memo. Credit memos are used to offer discounts and refunds to customers. Negative totals are seen on credit memos because of this. Don’t be alarmed with that negative number; it just denotes extra money given out due to a sale or a return.
Another name for this kind of invoice is a debit memo. A debit memo contains a positive total because it’s used when adjustments are made on purchase totals. Changes may need to be made if there are additional items added, and instead of making a brand new invoice, a debit invoice is created for traceability. It may seem easy to do a separate transaction, but that can make your bookkeeping a mess later on.
Pro Forma Invoice
A pro forma invoice is sent as an estimation of the transaction total. This is sent either before a project begins, or at the very least before it’s delivered to the customer. A pro forma invoice is used as an estimation of the total cost of services. Many folk like these because they know the estimated costs beforehand; that way, no financial surprises happen too far down the line. They are often revised upon project completion to include or disregard anything missed on the original pro forma.
This type of invoice is mostly for in-house employees of businesses to keep track of their timecards and payments received for work completed. These invoices are not used for customers because they don’t apply to actual purchases. Companies need to keep track of what they’re paying their employees and their independent contractors. This is a simple and easy way to do so.
A recurring invoice is used by a business when they want to charge their customers the same amount repeatedly over a period of time. This is also referred to as recurring billing. A common way for these invoices to be charged is with auto payments. Many money collecting methods and software can be used to set up automatic payments.
Even though the six types mentioned above are the most commonly used, there are still a fair amount of different online invoices that businesses and clients use. Here’s a list of a few more that you may find helpful for you or your business.
Remember those credit and debit memos? This type of invoice is a combination of the two. These are used when both a business owes a refund to a customer, but also the customer underpaid.
These invoices are used when a business is selling in an international market as opposed to a domestic one.
These are also used in-house when an employee wants reimbursement for a payment acquired for business-related expenses.
An interim invoice is used when there are multiple payment terms for a single large project.
The most common umbrella name for all of these types of invoices is an e-invoice. This term is used no matter what kind of invoice is being created. Sending an electronic invoice allows the client to be far more prompt and efficient than sending one through the mail.
As an employer, you should always make sure you are doing your invoices correctly. There are some invoicing mistakes that you should avoid, such as typos, unprofessional jargon, and errors when writing out names and addresses. Good luck!