20 Most Important Types of Invoices

They say that only death and taxes are certain in life. But if you own a business, there’s one more thing to worry about – invoices. They’re the most important financial document every business owner should know. But with 20 types of invoices to choose from, that can be quite a daunting task. 

Thankfully, we’re not invoicing specialists just for anything. Today, we’ll discuss everything you need to know about invoices in general, the 20 possible invoice types, and their unique use cases in a straightforward guide for complete beginners and seasoned invoicers alike. 

In this article, you’ll learn:

What Is an Invoice?

An invoice is many things. First and foremost, it’s the single most important financial business document. If we go one layer deeper, it’s both a confirmation of purchase and a payment request you issue your clients. 

Beyond that, invoices are the sum of their parts – all nine of which you can learn about in our article where we answer “What Does a Professional Invoice Look Like?”. 

But why is that the case? Let’s answer…

Why Are Invoices Important for Business?

Invoices address many more business needs than one might think. They are binding agreements between you and your customer, ensuring both parties fulfill their contractual obligations or face legal consequences.

This is important for companies of all sizes, but particularly freelance and small businesses, as they’re usually the main target of fraudsters and non-payers.

Next, invoices are the main source of your business’ revenue (especially in B2B). They play a vital role in bookkeeping, letting you accurately evaluate your company’s financial health. Consequently, this makes them a necessary part of paying taxes.

Why Should You Use Different Types of Invoices?

While the previous section explained the importance of invoices for businesses in general, it fails to consider one thing – the 20 different types of invoices promised in the title. So, before we dive into the details of each specific kind, let’s explain some of the over-arching benefits.

The 20 types of invoices are important because of:

• Increased Transparency and Accuracy: Each invoice variation is unique in its purpose and content. They track information relating to transactions, products/services provided, discounts, taxes, and additional fees.
  Consequently, these documents are ideal sources of historical information for your deals. They help prevent misunderstandings and legal disputes, but the added transparency also builds trust with customers.
• Payment Tracking and Record Keeping: Since the various types of invoices pertain information to each deal, they’re important for external reporting. We’ve mentioned taxation before, but this aspect also relates to investments, budgeting, and stakeholder payouts.
• Deal Negotiation: Beyond disputes, information from your invoices also plays an important role in negotiating future deals. This can influence your decisions regarding expected delivery times, pricing, late payment prevention, and more.
• Helping Clients Adjust to Payment Cycles: Different invoices carry different payment expectations. You can learn more about this topic in our 15 Most Common Invoice Payment Terms. For example, a standard invoice carries the expectation of a one-time payment, while a recurring one will let customers know they’re expected to pay repeatedly. 

What Are the 20 Most Important Types of Invoices?

As we explained earlier, there are anywhere between 15 to 20 possible invoice types. These differ in the companies that use them, specific use cases, payment terms, etc. Based on these specifics, we can break the invoices down into standard, project-based, and memo. 

10 Types of Standard Invoices

1. Sales Invoice

Definition: Along with receipts, sales invoices are the most common financial document you’ve seen a million times by now. As explained at the beginning of this article, they are legally binding documents that provide a comprehensive record of a completed sale, including information regarding products/services sold, quantity, and price.

When to use: Any standard deal. 
When to issue: After a sale is completed.
Who it’s best for: Any business selling goods or services.
Example: 

(Source: Billdu Invoice Template)

What is the difference between Sales and Proforma invoices?
These financial documents may seem completely identical at first glance. However, though they may feature all the same information, there are two important differences.

2. Proforma Invoice

Definition: Like a quote and unlike a standard sales invoice, a proforma invoice is a preliminary document detailing information regarding products/services sold, quantity, and price. It is used as a communicational tool between a seller and a potential customer to clearly outline a proposed deal. Learn more here.

When to use: During deal negotiation with a potential client.
When to issue: Before a standard sales invoice, during deal negotiation.
Who it’s best for: Any business selling goods or services.
Example:

(Source: Billdu Proforma Invoice Template)

3. VAT/TAX Invoice

Definition: A VAT/Tax invoice is an official document provided by a business to its customers, detailing the sale of goods or services, including the tax amount applicable (e.g., VAT), which can be reclaimed by the recipient if eligible. It is legal proof of the transaction and is important for tax reporting and compliance.

When to use: During deals where VAT/TAX is relevant.
When to issue: After a sale is completed.
Who it’s best for: B2B, Retail, E-commerce, and Import/Export businesses.
Example:

(Source: Zervant)

4. Consolidated Invoice

Definition: A consolidated invoice is a comprehensive statement that combines various individual invoices or transaction records into a single document, especially useful when dealing with numerous transactions or multiple services or products provided over a period.

When to use: After a long-term project/partnership or for recurring payments.
When to issue: After a long-term project/partnership or for recurring payments.
Who it’s best for: Subscription-Based, Service Providers, Large Retailers, and Travel and Hospitality businesses.
Example:

(Source: Zoho)

5. Overdue Invoice

Definition: An overdue invoice is a bill that has not been paid by its due date. Any invoice can become an overdue/late invoice for various reasons, including the customer forgetting to pay, not having money, or disputing the price.

Overdue invoices can cause critical damage to your bottom line. To counteract this, you can charge customers late fees or file a lawsuit. 

When to use: For invoices past their due date.
When to issue: After a customer fails to pay an invoice, with a warning and/or late fees.
Who it’s best for: Any company that has to deal with late payers.
Example:

(Source: FreshBooks)

What is the difference between Overdue and Outstanding invoices?
Both describe invoices that have yet to be paid by the customer. So, what’s the difference?

6. Commercial Invoice

Definition: Commercial invoices are documents used in international trade to identify the description, quantity, and value of goods being shipped. They are used by customs officers to calculate duty and tax and by companies to estimate the true price of a customer’s order. 

When to use: For international shipments.
When to issue: Before shipping your products.
Who it’s best for: Any company that ships goods overseas. Primarily used by importers and exporters.
Example:

(Source: Canva)

Is a Commercial Invoice always required?
When it comes to exporting products, whether or not a commercial invoice is required largely depends on the country where you’re shipping. Some territories require a commercial invoice for all imports, while others only for certain types of goods.

Whether or not you need to issue a commercial invoice alongside your shipment depends on the value, duties/taxes, and sometimes weight.

If you’re unsure whether or not you need to create a commercial invoice, you should contact the customs authority of the country where you’re shipping. 

7. Recurring Invoice

Definition: A recurring invoice is a bill that is sent to customers on a regular basis for the same goods and services. It’s commonly associated with subscription services in software, SaaS, and consulting.

For further details, consider exploring the Saas Billing article.

When to use: If you repeatedly offer a customer identical goods or services on a regular basis. It can be invaluable for automating the billing process.
When to issue: At the end of each billing period.
Who it’s best for: Subscription-based, SaaS, and consulting companies.
Example:

(Source: Inv24)

8. Retail Invoice

Definition: A retail invoice is a document that is issued by a retailer to a customer for the purchase of goods or services. 

When to use: For any type of retail purchase (online or in-store).
When to issue: At the moment of sale.
Who it’s best for: B2C companies, including brick-and-mortar stores, e-shops, restaurants, spas, gyms, etc.
Example:

(Source: Zoho)

9. Purchase Invoice

Definition: A purchase invoice, also known as a vendor invoice or bill, is a document that is issued by a supplier to a buyer for the purchase of goods or services. They are used by companies to make sure they’re paying their suppliers correctly, or file for tax deductions.

To gain deeper insight into the topic, explore the differences between purchase orders and invoices.

When to use: When you deliver/receive a deal from a vendor. 
When to issue: As soon as products or services are delivered.
Who it’s best for: Suppliers and their clients.
Example:

(Source: FreshBooks)

10. Self-Billing Invoice

Definition: A self-billing invoice is a document that is created by a customer and sent to their supplier for payment. It is typically used in situations where the customer has a high volume of transactions with the supplier or where the supplier does not have the resources to create their own invoices.

When to use:

• When the customer has a high volume of transactions with the supplier.
• When the supplier does not have the resources to create their own invoices.
• When the customer and supplier have a close relationship and trust each other.
• When the customer wants to have more control over the invoicing process.

When to issue: At the end of each billing period.
Who it’s best for: Any company, but most commonly used by large businesses with a high volume of transactions. Also sometimes used by SMBs with very good customer relationships.
Example:

(Source: InvoiceMaker)

6 Types of Project-Based Invoices

11. Retainer Invoice

Definition: Similar to a recurring invoice, retainer invoices are used by professionals when delivering identical services on a regular basis. However, they’re unique in that they request advance payments.

When to use:

• When the client has a large or complex project that will require a significant amount of time and resources to complete.
• When the client is new to the business, and they want to establish a long-term relationship.
• When the client needs the business to be available on-demand to provide services.
• When the business needs to secure a certain amount of revenue in order to cover its costs.

When to issue: Before you start working on a project or at the beginning of a billing period.
Who it’s best for: Companies that provide identical services on a rolling basis. This includes lawyers, accountants, consultants, freelancers, marketing agencies, etc.
Example:

(Source: FreshBooks)

What is the difference between Sales and Retainer invoices?
While the documents may seem similar, there are very important differences between them. 

12. Interim Invoice

Definition: Also known as a progress invoice, this type of document is used to request a partial payment from the total cost before a project is completed. Interim invoices are most often used in long-lasting projects, such as several weeks or months.

They are helpful because they can help you improve cash flow, reduce the risk of bad debt, set milestones for a project, and track progress. 

When to use: Part-way through working on a long-term project lasting several weeks or months.
When to issue: At a pre-determined point in the project, such as a specific milestone, halfway through, or at the end of a month. 
Who it’s best for: Companies that often work on long and complex projects. This can include construction, IT, marketing, consulting, architecture, law, and accounting firms.
Example:

(Source: Invoice2Go)

What is the difference between Interim and Partial invoices?
Both invoices are documents that request payment part-way through a project. So, what’s the difference?

13. Time-Sheet Invoice

Definition: Timesheet invoices are billing documents that feature a comprehensive breakdown of all the tasks that were done for a project, how long they took, and the hourly rate (potentially for each separately).

When to use: On projects that are built around hourly billing.
When to issue: At the end of a billing period or when the project’s finished.
Who it’s best for: Freelancers working across a variety of industries, including IT, marketing, consulting, creative, legal, construction, etc.
Example:

(Source: Microsoft)

What is the difference between a Standard Timesheet and a Timesheet Invoice?
While the documents may both feature an overview of hours worked, there’s a definite difference in their purpose.

14. Final Invoice

Definition: A final invoice is a document that is sent to a client after a project or service is completed. It details all of the work that was done, the cost of each item, and the total amount that is owed. 

When to use: After completing any project. 
When to issue: Right after finishing a project.
Who it’s best for: Any company or freelancer.
Example:

(Source: Billdu Blank Invoice)

Is a Final Invoice always required?
Final invoices aren’t a must for every deal. In retail and other low-cost transactions, you can issue a bill at the moment of purchase. Meanwhile, in long-term projects, they can be replaced with interim invoices. 

Nevertheless, issuing a final invoice is a good practice to ensure both parties are on the same page regarding work done and payments (finalized or due).

15. Collective Invoice

Definition: A collective invoice combines multiple transactions from the same customer into a single document. This can be useful for businesses that sell goods or services to customers on a regular basis, such as weekly or monthly. 

When to use:

• When you have a high volume of transactions with a single customer.
• When you sell goods or services to customers on a regular basis.
• When you sell a large number of items to a single customer.
• When you want to simplify the billing process for both you and your customer.

When to issue: Generally speaking, at the end of a billing period. However, more often, you’ll issue one at the end of a bigger project.
Who it’s best for: Any company, but best for ones with a high volume or sales, or in B2B. This includes wholesale, distributor, manufacture, software, SaaS, consulting, etc.
Example:

(Source: Ionos)

16. Expense Report Invoice

Definition: An expense report invoice is a document that is submitted to a company by an employee to request reimbursement for expenses that were incurred while on business travel or performing work-related tasks.

When to use: To request reimbursement from a company for business-related expenses, including travel, accommodations, food, etc.
When to issue: Either at the end of a trip or regularly for long-term arrangements, like at the end of the week or month.
Who it’s best for: Any company. Or rather, any employee who goes on business trips.
Example:

(Soruce: SaldoInvoice)

4 Types of Memo Invoices

17. Credit Invoice

Definition: A credit invoice, also known as a credit memo or credit note, is a document that is issued to a customer to reduce their account balance. It is typically used to correct an error on a previous invoice, to issue a refund for a returned item, or to offer a discount to a customer.

When to use:

• To correct an error on a previous invoice, such as if you overcharged the customer or if you shipped them the wrong item.
• To issue a refund for a returned item.
• To offer a discount to a customer as a favor or to resolve a dispute.
• To cancel an order.

When to issue: As soon as you discover the need for a credit invoice.
Who it’s best for: Any company, but primarily in B2B.
Example:

(Source: Billdu Credit Invoice Template)

What is the difference between Credit Memos and Credit Invoices?
It’s easy to see how the two terms may be confusing. However, making a mistake can be quite costly. Here’s what you should keep in mind.

18. Debit Invoice

Definition: A debit invoice, also known as a debit note, is a document that is sent to a customer to request payment for an additional charge. It is typically used when the supplier has undercharged the customer on a previous invoice when the customer has requested additional services, or when the customer has returned damaged or defective goods.

When to use:

• To correct an undercharge on a previous invoice.
• To charge the customer for additional services that were requested but not included on the original invoice.
• To charge the customer for damaged or defective goods that they have returned.
• To charge the customer for interest or late fees.

When to issue: As soon as you find a reason to issue one.
Who it’s best for: Any company, but primarily in B2B.
Example:

(Source: Pinterest)

What is the difference between Debit Memos and Debit Invoices?
It’s easy to see how the two terms may be confusing. However, making a mistake can be quite costly. Here’s what you should keep in mind.

19. Mixed Invoice

Definition: A mixed invoice is a document that contains both credit and debit items. It is typically used to adjust the balance of a customer’s account, such as when a customer returns some items but also purchases new items. Mixed invoices can also be used to issue discounts or to charge for additional services.

When to use:

• To adjust the balance of a customer’s account when they return some items but also purchase new items.
• To issue a discount to a customer.
• To charge a customer for additional services.
• To correct an error on a previous invoice.
• To resolve a dispute with a customer.

When to issue: As soon as you find a reason to issue one.
Who it’s best for: Any company, but primarily in B2B.
Example:

(Source: BoostExcel)

20. Account Statement Invoice

Definition: An account statement invoice is a document that summarizes all of the transactions between a customer and a vendor for a specified period of time. 

When to use: Whenever it is needed.
When to issue: At the end of a billing period or per customer request.
Who it’s best for: Any company, but best for ones with a high volume or sales, or in B2B. This includes wholesale, distributor, manufacture, software, SaaS, consulting, etc.
Example:

(Source: FreshBooks)

What is the difference between Account Statements and Account Statement Invoices?
It’s easy to see how the two terms may be confusing. However, making a mistake can be quite costly. Here’s what you should keep in mind.

Why Should You Use Billdu’s Invoicing App?

As you’ve had the opportunity to see, invoicing can be just as complex as it is invaluable to your business. And with efficiency being one of the biggest drivers for freelancers and enterprises alike, there’s no shame in wanting to automate the process.

Should you currently create invoices using Word or Excel, we recommend exploring the advanced capabilities of automated invoicing software.

And that’s where our Billdu Invoicing App can help. 

We could tell you all about how much money and time it’ll save you (both in terms of work and on this earth since we’re eco-friendly), but why don’t you take a look for yourself?

You can try any of our Plans (yes, including Premium) for 30 days completely free! Here’s what you can expect:

• Unlimited Invoices,
• Unlimited Clients,
• Recurring Invoices,
• Payment Reminders,
• Quick & Easy Doc Builder,
• Payment Reminders,
• Accountant Collaboration,
• And more!
  

Design your invoice templates with Billdu!

Experience a seamless invoicing process with Billdu like never before. Try it for free today!