Types of Invoices for Small Business If you are like many small business owners, send invoices to customers after providing a product or service. An effective billing system offers customers more flexible payment options. They need to know what types of invoices should be sent to customers for different situations.
Types of bills
There are many different types of invoices that you can send to customers. Each billing type has a specific purpose. Below are six types of billing invoices that you can send to customers.
- Pro forma invoice
A proforma invoice is not a payment request. You can think of this document as a preliminary invoice. Send a proforma invoice before completing the work for a customer.
The pro forma invoice shows the customer how much he has to pay for delivering a product or providing a service. You can also use a pro forma invoice to see the value of the items you give as gifts.
Normally, a pro forma invoice calculates the work you have done and the amount of items it will cost. The pro forma bill represents a commitment to deliver something. The conditions of a proforma invoice may change during the course of the project.
- Interim bill
A preliminary bill breaks down the value of a large project into multiple payments. You send preliminary invoices when you complete the large project.
The bigger the project, the more it will spend on labor, material, and other operating costs. With preliminary invoices, you can manage the cash flow of your small business for large jobs. You do not have to wait until the end of the project to receive payments. Instead, you can use the money from the preliminary bills to cover part of the cost.
3rd final bill
As the name implies, you send a final bill after completing a project. The final bill gives the customer the certainty that the job is done. Unlike a pro forma invoice, the final invoice is a payment request.
Your final invoice must include a detailed list of the products and services you provide. You also have to consider the total cost, the due date and the payment methods.
Send the final invoices immediately after completion of the work by post or online. In this way, you can keep the cash flow in your company at a healthy level and avoid collection problems.
- Expired invoice
Sometimes your customers do not pay before the due date in the final bill. In this case, you must send an overdue bill. Send overdue invoices immediately after an invoice is received late.
An overdue bill informs the customer that the payment deadlines have expired. Include all the information of the final invoice in the overdue invoice. Include all late or interest surcharges that penalize the customer for late payments.
If overdue bills do not work, you may need to choose a different approach for customers who do not pay. Consider changing your payment terms, setting up a payment plan, or hiring a collection agency.
- Recurring invoice
Use recurring invoices to charge customers for ongoing services. They charge the same amount at regular intervals, similar to some electricity bills.
Using a recurring billing system works well for subscribers. You can also use recurring invoices if your customers are members of your company. For example, if you own a gym and members pay a monthly fee, recurring bills may be the best billing option.
The businessman Renzo Costarella explained the recurring bills in a Due.com article:
“If you have ongoing projects with the same customer, it’s often better to use a recurring invoice that allows you and the customer to set a billing interval (usually weekly or monthly) and bill them automatically at the specified interval do this part of his routine, which makes him pay faster. “
Use a credit to confirm that you owe money instead of charging a customer. The credit note is equal to or less than the amount of the customer’s original invoice.
You can send a credit because your customer has returned the goods, the products you have shipped have been damaged or you have the wrong one