What Are The Different Types of Invoices?

small business owner handling invoice

Last Updated on November 30, 2023

Studies have shown that 61% of late invoice payments are due to incorrect invoicing. These incorrect invoices can significantly stunt cash flow for small businesses, which is why understanding the different types of invoices is so important.

By knowing which types of transactions or situations call for which types of invoices, you can prevent your business from becoming part of this statistic.

Factors that go into which type of invoice is relevant to a given transaction include the industry being served, how the invoice is sent, what the invoice payment terms are, and the stage of the project. To gain a clearer picture, let’s take a look into each type of invoice.

What Are The Types Of Invoices?

Before exploring the other types of invoices every business owner should acquaint themselves with, let’s first talk about the most common invoice: a standard invoice.

1. Standard Invoice

A standard invoice, also known as a “basic” or “regular” invoice, is a document used in a financial transaction that requests payment from the buyer for services or goods provided by the seller. Every standard invoice will include:

  • Selling company name and contact information
  • Buying company name and contact information
  • A unique invoice number
  • Description of services with payment amount
  • Invoice date
  • Invoice due date
  • Invoice payment terms
  • Payment instructions

While a standard invoice is probably what you think of when you hear the term “invoice,” small business owners should still expect to come across the other types of invoices listed below at some point throughout their business’s lifespan. So, let’s look into the other variations of invoices.

2. Pro Forma Invoice

A pro forma invoice is sent prior to the delivery of the goods or services and provides the buyer with a good faith estimate of the final cost. Pro forma invoices are typically used in international transactions and provide the necessary information for government officials at customs to determine the duties owed. Although it’s not the final version, this type of invoice gives the buyer a chance to negotiate delivery terms prior to receiving the final request for payment.

Because pro forma invoices are sent before the product is received by the buyer and is used by customs to calculate duties, they include information like:

  • Description of the goods or services
  • Buyer and seller information
  • Invoice number
  • Invoice issue date
  • Shipping details, including weight, shipping date, transportation method, etc.
  • Transport charges (shipping costs)
  • VAT, or other taxes that could apply

3. Commercial Invoice

A commercial invoice is similar to a standard invoice; however commercial invoices are regularly used for international deliveries.

Commercial invoices are necessary because shipping goods across borders affects costs, such as VAT taxes and shipping price, thus those are included on the invoice. This invoice assists the government, particularly customs, to determine the exact value of the product. Additional information you might find on a commercial invoice that you would not find on a standard invoice include:

  • Type of export
  • Reason for export
  • Carrier
  • Carrier tracking number
  • Country of origin
  • Terms of trade
  • Total gross weight of product
  • Currency code

Government employees use commercial invoices for further control of what’s being imported and exported from their country.

4. Recurring Invoice

A recurring invoice is any type of invoice that is routinely issued to the same customer and at consistent time intervals.

For example, think of all the recurring charges you have each month pertaining to your home, such as utility bills and water bills. The bill you receive for your monthly rent would be considered a recurring invoice.

Related: Invoice vs. Bill: What’s The Difference?

5. Retainer Invoice

Retainer invoices are advanced payments that are commonly used for long-term consulting partnerships. Lawyers are one of the most well-known examples of professionals who work on retainer, as they typically ask for payment from clients in advance of their work or services rendered. By submitting a deposit (retainer), the client can then obtain the lawyer or law firm’s legal services.

An example of a retainer pricing model would look as follows:

  • Client purchases 20 hours of work per month
  • Consultant charges $150/hour
  • Each month, the client pays the consultant $3000 (20 x 150).

The retainer invoice is sent prior to the consultant’s work and is eventually included with the final invoice once the work has concluded. Retainer pricing models allow business owners, contractors, and consultants to unlock consistent cash flow.

6. Credit Invoice

A credit invoice, also known as a credit memo, is a document issued to the buyer when a refund or credit needs to be implemented to a previously-sent invoice. This kind of invoice could be considered an “amendment” invoice.

Examples of when credit memos might be sent to a buyer include:

  • To reconcile an accounting error
  • To reconcile an error in the description of goods or services provided
  • When the buyer sends a product back to the customer
  • An error in tax calculation (i.e. forgetting to apply a VAT quota)
  • Forgetting to account for shipping costs

Credit memos must reference the original invoice and include the reason for sending.

7. Debit Invoice

A debit invoice, also known as a debit note or a debit memo, is issued to the buyer when the amount they owe to the vendor needs to be increased. A debit memo is essentially the opposite of a credit memo, which is issued to the customer for refund purposes.

8. Mixed Invoice

A mixed invoice combines two types of invoices into one: a credit invoice (credit memo) and a debit invoice (debit memo).

Mixed invoices are sent to customers when credit and debit charges are required on the same bill. Both charges are combined, with the aggregate total listed.

An example of a mixed invoice is as follows:

A buyer has $1000 worth of credit in a credit memo and $2500 worth of debt in a debit memo, meaning the buyer owes the seller $1500 ($1000 – $2500). A seller would then send a mixed invoice to the buyer, which shows a charge of $1500.

9. Past Due Invoice

A past due invoice is exactly what it sounds like: an invoice that is past due on payment.

To understand when an invoice becomes past due, one must first understand invoice payment terms, which are predefined terms outlining when payment is due.

For example, an invoice with Net 15 payment terms means payment is due 15 days after it is issued to the customer. An invoice with Net 30 payment terms means payment is due 30 days after it is sent. When these payment terms are not met, the invoice becomes past due.

10. Timesheet Invoice

Timesheet invoices are necessary when a business uses a consulting firm or contracts out work to a business for a specific project.

When employees of the consulting business work on the project, they log their hours on a timesheet. Then, a timesheet invoice with all billable hours worked is created and sent to the customer for payment, which is based on total billable hours worked by the employees.

Timesheet invoices are often mutually beneficial for both the service provider and the client. They ensure that the employees working on the project are remaining productive, and the client is only being charged for exact time worked.

11. Consolidated Invoice

A consolidated invoice combines multiple subscriptions to a business into one single invoice.

For example, if you sign up for three services on the same website within the same billing period, you may find that all three charges are combined onto the same invoice. Rather than submitting payment three different times, you would only submit payment once. Thus, the three separate charges are considered part of a consolidated invoice.

12. E-invoice

An e-invoice is an electronic invoice sent to customers, typically designed with the help of a standard B2B invoice template. E-invoices usually contain all of the same information you would find on a standard invoice, but they are sent electronically, rather than by mail.

With digital invoicing, e-invoicing tools such as ERP or accounting software pull information from a customer’s order to automatically generate most details on the invoice. These tools help businesses preserve time by saving and storing customer and product information to reduce manual labor. It also reduces accounting errors, improves the invoice reconciliation process, and allows for quicker customer payment.

Purchase Invoice vs. Sales Invoice

A single invoice can be both a purchase invoice and a sales invoice. The difference between a purchase invoice vs. sales invoice lies in which party is referencing the invoice: the seller or the buyer.

A sales invoice is a document created and sent by the seller in order to bill a customer for goods or services provided. It is used to request payment from the customer, and it details a list of the items purchased, along with the cost for each product or service.

The party receiving the invoice, however, would view this same invoice as a purchase invoice. This can be easily remembered by the following:

Sales invoice = in the eyes of the seller
Purchase invoice = in the eyes of the purchaser

At the top of this article, we described standard invoices. A sales invoice or purchase invoice could both be considered a standard invoice.

Related: Purchase Order vs. Invoice – How Are They Different?

Types of Invoices FAQs

What is a basic invoice?

A basic invoice is a document sent by the seller to the buyer that requests payment in exchange for a service or product. Also known as a regular invoice or standard invoice, a basic invoice lists a description of all services provided by the seller. Once invoice payment is complete, a basic invoice acts as an important verification document for a business’s accounting team.

Every basic invoice should include the following:

  • Selling company name and contact information
  • Buying company name and contact information
  • A unique invoice number
  • Description of the goods or services provided with their respective costs
  • Invoice issue date
  • Invoice due date
  • Payment terms
  • Payment instructions

How many types of invoices are there?

There are many variations of invoices. It’s difficult to put an exact number on how many types of invoices there are because businesses sometimes use terms interchangeably to describe different invoices.

Additionally, a single invoice can fit the description of multiple types of invoices, depending on its purpose and the information included. For example, an invoice can be both a standard invoice and a sales invoice. Recurring invoices can also contain individual standard invoices.

Even though you will get varying answers for how many types of invoices exist, 12 of the most common types of invoices include:

  • Standard invoice
  • Pro forma invoice
  • Commercial invoice
  • Retainer invoice
  • Mixed invoice
  • Consolidated invoice
  • Recurring invoice
  • Timesheet invoice
  • Past-due invoice
  • Credit invoice (credit memo)
  • Debit invoice (debit memo)
  • E-invoice