Invoicing plays a pivotal role in any business. Not being able to create and send invoices accurately can lead to delayed payments, hindered profits, and a bad business reputation showed an article from Intuit.

Thanks to invoice generator software for Windows PC, you get access to a comprehensive range of invoice types and templates. Yet, a lot of businesses aren’t aware of different kinds of invoices.

Using the right invoice can guarantee on-time payments and consistent revenue and profits. That said, let’s take a look at some of the most commonly used invoices in business.

Different Types of Invoices and When to Use Them

The invoices you send can vary depending upon your business model and the type of products or services you provide. Here are a few common types of invoices from freelancers and small business owners.

Different Types of Invoices and When to Use Them - Moon Invoice

1. Standard Invoice

A standard invoice, as the name suggests, is the final general invoice. It includes information like the seller information, buyer information, items purchased, the total price, and the unique invoice number. It features a standard format and can be used for multiple transactions across all industries.

When to Use?

A standard invoice is probably the most common invoice freelancers, and small businesses use. If you’re a small or medium-sized retail owner, you should use a standard invoice for billing on a regular basis. You can use these invoices in all industries, such as services, retail, hotel, manufacturing, etc.

2. Progress Invoice

Progress invoices are best suited for projects and assignments that span over a long period. Let’s say you’re a construction business working on a new residential apartment building. A survey from SOC suggested that a multifamily apartment building takes approximately 11.7 months to finish.

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In case of a standard invoice, you’ll need to complete the entire project, which would take about a year. After compelling the project, you’ll send the final invoice. In a nutshell, you’ll need to wait for a year to get paid. And if your client refuses to pay at the end, you’d experience more delays.

Progress invoices are ideal for such lengthy, on-going processes. You can bill your clients from time to time, showing the progress of the project and the costs associated with it.

When to Use?

If you offer services that stretch over a long time, use progress invoices. Apart from construction businesses, progress invoices are also ideal for digital product development projects and freelance assignments.

3. Commercial Invoice

If your business involves foreign trade, you’ll need to use commercial invoices. Also known as business invoice, commercial invoice records the documentation of foreign trades. This mainly includes the import and export of goods from different countries.

Commercial invoices enable customs declaration, which is essential when a shipment crosses international borders. A commercial invoice includes seller information, buyer information, product details, the total cost, and associated taxes. In addition, these invoices also include information like country of origin, carrier identification number, authorized signature, and more.

Commercial Invoice - Moon Invoice

When to Use?

Commercial invoices are only used when you deal with foreign companies. If you want to send a shipment to another country, you’ll need to create a commercial or business invoice.

4. Timesheet Invoice

Timesheet Invoice, or simply a timesheet, is a unique type of invoice used by professionals who charge based on the duration of the services provider. Consultants, psychotherapists, lawyers, and trainers are some professionals who use a time-based business model.
Freelancers and digital agencies that charge on an hourly basis also use timesheet invoices. You can also use timesheets if you rent out items, such as cars, mowers, etc. This type of invoice usually mentions the time offered in place of items or products.

When to Use?

Use a timesheet invoice if you provide time-based services. You can use it if you’re a consultant, therapist, lawyer, freelancer, or any other professional who charges on a per-hour basis.

5. Value-Based Billing

Value-based invoice management is common where projects are billed for their value and not the time required to complete them. Also known as performance-based billing, value-based invoices are commonly used by freelancers and digital agencies. In value-based billing, the fee amount is predetermined before commencing the work.

When to Use?

Value-based billing is ideal for beginner freelancers and agencies. These services are suitable only for beginners because as you deliver projects on a large scale, deciding the true value of your work beforehand may not be easy.

6. Utility Invoice

We don’t usually notice, but the electricity and water bills we receive are also invoices. These types of invoices are called utility invoices. They mention the amount indicating the usage of a service. Telephone and internet providers also use a utility invoice for billing.

When to Use?

You can use a utility invoice if you’re an internet or telephone service provider. These invoices are also ideal for private utility suppliers, like water tanker businesses.

7. Fixed-Bid Billing

Fixed-bid invoice management is best suited for projects that have well-specified requirements. For example, a home painting or landscaping projects typically included a defined amount of materials required. In such cases, you can issue a fixed-bid invoice for billing.
This type of invoice is also ideal for small digital agencies and freelance businesses that charge on a per-project basis.

When to Use?

You should use fixed-bid billing invoices if you offer projects at fixed costs. This type of invoice is also ideal for small businesses that work on fixed rates, like home improvement or landscaping services.

Wrapping Up

Back in the day, when businesses relied on paper invoices, utilizing different invoice types was not possible. But now, with invoice generator software for Windows PC available, you can create different types of invoices within seconds.

But it’s also crucial for businesses to understand the purpose and the right use of each type of invoice. Sending a wrong invoice can cause inaccuracies and inconsistencies, leading to payment delays.

Are you looking for feature-rich, robust, and cost-effective invoice software? Check out MoonInvoice now.