What are the different types of invoices?
Learn about the three major types of invoices and when to use them to properly bill your customers.
Invoices come in many shapes and sizes, and each one is designed for a specific purpose. Here are three of the most common types of invoices and what they’re used for.
3 common types of invoices to send.
When it comes to business transactions, different situations call for different types of invoices. Not all invoices are created equal. Understanding the differences can help with financial operations and transparency.
Let’s explore three key types of invoices, each tailored to specific scenarios and purposes, and discover when and why to use them:
- Pro forma invoice
- Interim invoice
- Final invoice
Invoice type 1 — Pro forma invoice.
A pro forma invoice is like a “pre” invoice. It’s not a demand for payment like a traditional invoice. It’s more like an estimate of how much products or services will cost once your work is finished.
This type of invoice is typically used for larger projects that contain several products or services. It gives customers an idea of the scope of the project, an itemized list of the costs, and the total amount that will be due once the project is complete.
Invoice type 2 — Interim invoice.
An interim invoice is designed to break down the cost of a big project into smaller payments. Instead of sending one final invoice after the project concludes, you send several small ones as the project progresses.
You can benefit from using interim invoices to maintain cash flow during long projects when you’d otherwise have to wait until the project is finished to get paid. Interim invoices can also benefit your customers, helping them manage project costs by breaking them down into more manageable chunks.
Invoice type 3 — Final invoice.
A final invoice is exactly what it sounds like — it’s the official request for payment for a completed project, service, or product. It should include all the information necessary for customers to understand what they’re paying for and how to pay.
If there’s not a long project that requires an estimate or interim invoices, this is the type you’d use. For most businesses, this is the “standard invoice.”
In addition to the main three, there are some other invoice types you can work with.
Other notable invoice types.
While pro forma, interim, and final invoices are among the most common types of invoices used in business, there are several other different types of invoices that serve specific purposes. These include:
- Recurring invoice. This type is for regular billing of services, like utilities and subscriptions.
- Credit memo. This invoice corrects previous invoices, mostly for returns or billing errors.
- Commercial invoice. This form is required for international trade, detailing shipment contents and terms for customs.
- Time-based invoice. This type is used for hourly or project-based work, tracking, and billing time spent.
- Progress invoice. In construction or long-term projects, it bills for work completed at different stages.
- Expense report. Employees use it to report reimbursable expenses from business activities.
Simplify invoicing for all types of invoices.
Many businesses require an invoice approval workflow and require signed approval before a job can be completed or billed. Accepting electronic signatures using software like Adobe Acrobat Sign can simplify project approval by letting customers legally sign invoices remotely.
Explore more about how to make billing customers easier with any type of invoice.
