Last editedAug 20222 min read
One of your chief responsibilities when you’re running a small business is to create and send invoices to your customers for the products or services you’ve provided them with. Invoices provide a record of sale and demonstrate a customer’s obligation to pay you. They provide verification, usually in writing, of the agreement between your company and your clients. Invoices not only set out your payment terms, but, if you’ve included all the relevant details, they increase the chances of you getting paid accurately and on time.
However, you may not know that there are different types of invoices in the business world. If you’re involved in shipping goods abroad, for example, you will need to use commercial invoices. Alternatively, if you need to keep cash flowing, you might want to send out intermittent, or recurring invoices. In this post, we’ll ask “what are the different types of invoices?” and provide you with some types of invoices with examples.
What are the different types of invoices?
To help you identify the types of invoices that could be applicable to your business, here’s a brief rundown of some types of invoice.
A proforma invoice can be a useful way to outline to clients the prices of your goods or services. These types of invoice can be sent before you commence work on a project. Proforma invoices aren’t requesting payment, they’re offering customers notice that a payment will be due. In many ways these types of invoice act like estimates. However, instead of giving customers a rough estimate, they tend to be exact (although they can be subject to change).
If you’re taking on a large, time-consuming project for a client, you may want to send out intermittent invoices as you hit milestones along the way. These invoices can be sent out following a regular schedule, or as you complete a specific part of a project. By breaking down payments into smaller amounts, you and your clients can benefit.
These may look similar to interim invoices, however, there are differences between the two. While interim invoices allow you to break up payments for larger projects that have a definitive end, recurring invoices can be scheduled to continue indefinitely. For instance, you may manage an aspect of a customer’s business as part of a long-term contract. Rather than send one invoice annually, you can set up recurring invoices to be sent out on specific dates.
GoCardless provides the perfect way to collect recurring invoices, allowing businesses to collect invoice payments directly from a customer’s bank account, on regular, specified dates, via direct debit. By collecting payments this way, you’ll know exactly when you’re going to be paid, saving you time and money spent on chasing up overdue invoices. GoCardless also integrates with over 300 partners, including accounting and invoicing software like Xero and QuickBooks, so it’s easy to keep track of all invoices in one place.
If you find you’re doing small amounts of work for a customer over an extended period of time, you may want to consolidate everything, using a collective invoice. For example, if you supply certain items to customers regularly, you may want to invoice them every month, or quarter. Or, you might want to include your billable hours once a month, rather than send lots of individual invoices every time you complete services for a client.
As the name suggests, this is the last invoice to a client and will include all work completed and the outstanding balance due.
We hope this guide has given you an insight into the different types of invoices you can use to collect payment from your customers. The types of invoice you choose can help you manage your cash flow, as well as ensure both you and your customer are on the same page.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.