The statistics say that 45 percent of new businesses fail in the first five years. Many of these failures are due to financial issues. This is why it is important to get invoicing right.
Creating invoices for your business is something that you probably have to do on a daily or weekly basis. There are several different invoice payments and if you are a new business owner you may be wondering exactly what each type entails.
You may also be wondering which one is right for your business.
Here’s an in-depth look at the different types of invoices that are available, and how to use them.
Table of Contents
Credit Invoice
A credit invoice is sometimes referred to as a credit memo. It is given by a business when they need to give a client a refund or a discount. It is sometimes given to correct an invoice. The invoice may have had an overcharge.
The balance on a credit invoice will always be a negative number. This is because you are sending back money to the customer or client. You can use software to generate an invoice quickly to reimburse your clients.
Standard Invoice
A standard invoice is a typical invoice that is issued by most businesses and sent out to their clients. This type of invoice has the business name as well as the contact information printed on it.
The client’s name and contact information are also shown. Your business will usually place an invoice number on that sheet of paper, and the amount of money that the client owes will also be listed.
This type of invoice is standard in most businesses and industries.
Debit Invoice
Debit invoices are usually given when a business needs to increase the amount of money that the client owes to them.
A debit memo is usually issued when an adjustment needs to be made to a bill that is already in existence. For example, if you work on an hourly basis and you end up working more hours, you may need to adjust the invoice.
You would then go ahead and send the client a debit invoice for the additional hours that you have worked.
Commercial Invoice
A commercial invoice is usually issued by a business when it sells goods internationally. Commercial invoices usually outline the details of the sale so that custom duties may be applied.
Commercial invoices will contain the weight or the volume of the product. A description of the goods, the packaging format, the quantity of the shipment, and finally its total value.
Understanding the Types of Invoices
The four types of invoices that have been discussed above are the main ones that you are likely to encounter when doing business. Whatever type of invoice you are sending, you need to make sure it contains accurate information and that your contact information is listed.
Invoices offer a great way for you to communicate the purpose or the value of services with your clients. Having a professional-looking invoice is very important, so pay attention to not only what is on your invoice, but how your invoice looks as well.
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