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When you are into business, it is unlikely that you have not heard the word invoice even once in your life. Invoices are commonly mentioned especially in selling transactions. However, many people cannot distinguish the difference between a receipt and an invoice. Some would even treat them the same. To clarify, the significant difference between them is that the invoice is issued prior to the payment of goods or services while the receipt is issued after the payment.
You can also find several useful examples of blank invoice in the next section. An invoice is also used to track the sale of goods and services and can be used to demand or request payment from the buyer while a receipt acts as an evidence or documentation that the transaction has been paid or completed. In this article, presented below are the elements as well as the types of invoice.
An invoice is a document used to track the sale of goods or services. It indicates the type of goods or services in the transaction, the price, the quantity, as well as the total amount due. It is issued prior to the payment of the goods or services, and it can be used as a demand or request of payment from the buyer.You may also see sales invoice examples
An invoice must contain the necessary information to complete the transaction. Here are the essential elements of an invoice:
this includes the name, address, and contact details of the seller. This is important not only for the branding of the selling company but also for the buyer to have a contact information of the seller. Contact information is needed when the buyer has further questions, clarifications, or requests, and it also serves as a way to communicate with potential customers who might see your document.You may also see service invoice examples
this includes the name, address, and contact details of the client. The information of the client must be written in case there are discrepancies. This is also to confirm the identity of the said client.You may also see auto repair invoice examples.
the heading of the invoice must contain the word heading, and alternatively, it can also contain the company name and tagline as well.
this is the number of the invoice to be used in tracking the shipment as well as for documentation and audit purposes of the selling entity.You may also see construction invoice.
the date of the issuance of the invoice must be included as this can be used in tracking the time of the confirmation of the transaction as well as the basis of any limited-time discounts.
this contains the list of items or services for payment, expenses, taxes, fees, among others.
although the payment terms may have been previously agreed upon, they must be stated again on the invoice to reinforce the agreement.You may also see invoice in excel.
The above are the common and important elements usually included in an invoice. There are other items that can be included in its content like notes or remarks from the seller, and these are acceptable as well.You may also see catering invoice example.
Invoice comes in a lot of forms and types. The most commonly used types are the following.
This is a basic format of an invoice and is used for different business transactions. This consists of all the basic information to be included in an invoice like the unique invoice number, name of seller, the company’s name, address, contact details, name of the buyer, address, contact details, items purchased, quantity, and total cost. A lot of industries such as the retail industry, agriculture industry, and wholesale trade industry use this type of invoice for it is very convenient.You may also see proforma invoice.
A commercial invoice is a special invoice, different from the ones we commonly see in the market and stores, that are designed to document foreign trades such as shipment of goods from one country to another. This invoice is used for customs declaration when the product is crossing international borders. Its elements are as follows: the name and address of both the seller and the buyer, items or services for payment, fees, and amount of tax payable. It has special attributes such as the carrier identification number, country of origin, harmonized code, declaration that the invoice is authentic, and the signature of the person in charge of the transaction.
This is commonly used in works that stretch over a long period specifically in long-term construction contracts, which takes a lot of money and time for the project to be completed. The contractors send progress invoice or billings from time to time showing progress of the work and the amount to be paid. Usually, the amount to be paid depends on the percentage of completion of the work. This amount is used to pay the employees working the construction and to cover the expenses for the current expenses.You may also see hotel invoice.
This invoice is preferred by professionals such as psychotherapists, consultants, and lawyers whose services are more intellectual than technical and are evaluated on the basis of the time for which the service is being provided. This type of invoice typically mentions the “time” in place of “product” or “service” being provided. This can also be used in dealing rented items such as a car, large cooking utensils, tents, costumes, and crane.You may also see rent invoice.
This is particularly the type of invoice used in an electric bill or a bill for the telephone, cable, Internet usage, or gas. It presents the amount payable on the usage of the utility you are using in payment for availing their services. This invoice differs from other invoices as it shows the due date, the amount of penalty payable after the due date, the billing period, and other messages or notes from the utility service provider. Furthermore, it also includes the previous amount paid or due.You may also see medical invoice.
This type of invoice typically applies to the rental industry. It has a fixed rate and is delivered at the end of each month. This can include house rent and tool rental such as a tractor or any items that one needs for only a specific time of a year.
Pro forma invoice is an invoice that gives a rough idea to the buyer about the cost of products and services, basically referred to as estimation or a quote. This is sometimes used as a seller’s declaration and statement of his commitment to deliver the mentioned goods or services at the stated price. It can also mention the advance payment against the estimated amount of the goods or services. It is not recorded as accounts receivable by the seller or accounts payable by the buyer because it is not a true invoice.
A debit memo is generate by an organization at times when it incurs a large bill and it is estimated that it will pay the whole amount on time. It functions as a debit memo and an invoice at the same time, showing the balance and late fees if any.
A pending invoice shows the balance amount or the pending payment from the goods and services. In this case, the outstanding amount or the amount that was not yet paid is presented in the face of the invoice. For clarity, here is a brief example to illustrate the transaction involving a pending invoice. For example, if the buyer receives an invoice of $500 and he pays half of it, then the invoice for the balance amount of $250 will be sent to the buyer next time as pending invoice. If again he does partial payment of $100 then he will receive pending invoice of the remaining amount of $150 next time. This continues until the buyer makes the full payment for the transaction.You may also see travel invoice.
This billing is based on the services provided to the client and their value and is considered as performance-based billing. The amount of the invoice will depend on the amount of work delivered to the client rather than the time taken to complete the project or task and is based on the needs, requirements, and expectations of the client. Prior to performing the work, the amount of the fee must be determined first. It might be difficult for creative professionals to decide on the value of their output.You may also see free invoices.
Fix-bid billing is best suited for the projects with well defined requirements as it is easy to determine the cost of the project, the example of which are small businesses and freelancing services. The service provider can easily give a quotation of the price for the project either beforehand or after the completion as he or she can fix the price.
Different services that require different amount of time to be spent for completion needs time-based billing as the actual value of the project can be known when you are using a time-based billing. For creative projects in which the time to complete for the project is uncertain, time-based billing is the best fit for such project. Hence, they are perfect for projects with uncertain amount completion time.You may also see photography invoice.
An invoice is important as it serves as a summary of the goods or services for payment, and it can also serve as a demand or request for payment from the buyer. It has essential elements such as the details of the seller and buyer, heading, invoice number, date, body, and the payment terms. There might be other items to be included in an invoice like notes and remarks from the seller.You may also see billing invoices.
There are several types of invoice and they are as follows: standard invoice, commercial invoice, progress invoice, timesheet, utility invoice, recurring invoice, pro forma invoice, debit memo, pending invoice, value-based billing, fixed-bid billing, and time-based billing, the discussions of which are presented in the previous section.You may also see business invoice.If you want to create your own invoice, you may refer to the examples of blank invoice presented in the above section.