11 Types Of Invoices That Every Business Should Know

11 Types Of Invoices That Every Business Should Know

Team Invoice temple knows how difficult it is to manage and send out invoices to every client amidst the ocean of tasks that you have to perform in a day.

Sometimes, it is overwhelming. Yeah, we all agree! But to maintain a constant cash flow in your business it is essential to send out the right invoices to the right clients at the right time.

In the sea of information, it is quite a task for you to find the right invoice you have to send. No worries, we are here to help you out!

Various Invoice Formats

Here are the different types of invoice formats that you should know:

Traditional Invoices

Traditional invoices are invoices that are printed and sent to the client's manual address. If you were sent out invoices 10 years ago, you might opt for traditional invoices. But with the development of technology, we are now with a new format of sending invoices which is digital invoices.

Digital Invoices

Digital invoices are invoices generated using software or manually using excel sheets or other tools. Unlike traditional invoices, digital invoices are a sustainable way of sending and receiving payments. While using an online invoice maker like Invoice Temple, you just have to enter the basic details of the clients once in the software and it'll be automated for the upcoming payments.

You can manually create an online invoice which makes you create one every time you need to send out an invoice which is quite a time-consuming task. That's why we advise you to save your time and money by investing in an online invoice generator such as Invoice Temple.

Types of Invoices

Based on the type of industry that you are in, due dates, requirements, and various other factors, invoices can be classified into 15 major categories. The vital task here is to know which one to send and when. And that's what this article is about. Come, let’s dive in!

The 11 types of invoices can be classified into 3 different fields. They are:

  • One Time Invoices
  • Project Invoices &
  • Invoice Memos

One-Time Invoices:

1. Proforma Invoice And When To Us It:

A proforma invoice is an estimate or a quote that you send to the buyer before selling any goods or services. It contains the approximate cost of the product or service, the expected delivery date, and other details.

However, all the information that you send in a proforma invoice is subject to change and what you have given is just an approximation. Once the client looks at the proforma invoice, the client might be able to identify the requirements from their side and can also analyze if the estimate will suit the client’s budget. After you receive a green signal from the client, you may start working on the project.

One thing to be noted here is that a proforma invoice is not a nudge for the client to pay you. It’s just an understanding for both you and the client and acts as a nudging factor to start the work only.

2. Sales Invoice

This is the classic version of an invoice and this is exactly what your client needs when they ask you to send an invoice. And unlike a proforma invoice,  a sales invoice is the nudging factor for the client to make the payment before the due date.

A sales invoice essentially contains all the essential elements of an invoice such as the price, contact details, terms, and conditions, etc. it also includes various payment gateway options for the client to make the payment on time. So, this invoice has the potential to act as legal proof and documentation of the transaction happening between you and the client.

3. Overdue Invoice

An overdue invoice is an invoice that you sent after the due date of the sales invoice if the client has not made the payment before the due date as mentioned in the sales invoice. It acts as a reminder for the client to make the payment. This invoice in addition to the elements of a sales invoice also contains the penalty fee for late payment.

In short, when the buyer fails to make the payment within the mentioned time, the sales invoice becomes the overdue invoice and the buyer becomes the defaulter. In such cases, if there’s no action from the side of the defaulter even after proper notice and reminders, you can always go for taking legal action with the help of the sales invoice that you’ve already sent out to the client. In other critical conditions, you can also opt to write off the invoice. But mostly, it is not advisory to write off invoices as it may affect the cash flow of your business.

4. Total Invoice:

A total invoice, as the name suggests, is a consolidated invoice of the already existing invoices. This invoice comes in handy if you’re working on chunks. A total invoice can help both the buyer and the seller by making it clear about the exact amount of payment. It avoids confusion and makes it easy for the client to make payments instead of paying all the sales invoices one by one.

Project Invoices

5. Retainer Invoice

This is similar to collecting an advance amount so both parties can be assured about getting the work and payment will be done on time.

In most cases, this prepayment made by the client provides access to the services as required shortly. In other words, we can say it's like a hotel reservation that we make several days before our actual visit to reserve tables.

6. Interim Invoices

As we discussed earlier, interim invoices are those small chunks of invoices or intermediate invoices that we send across to the client as we keep on finishing small portions of the project. These interim invoices help you fund the project and proceed further.

For example, when you build a house, you make the payments in chunks as your house gets built in parts. You pay for the electrical work, painting, and other things separately and in the end, you pay the remaining amount when the builder or contractor sends a total invoice.

So the chunks of money you paid for separate tasks like electrical work, painting, and plumbing are because of the interim invoices that the builder or contractor sent you.

7. Timesheet Invoice

If you are a freelancer who charges on an hourly basis, then this invoice is for you! This invoice provides the number of hours worked by the service provider multiplied by the rate they charge per hour.

Some essential elements of a timesheet invoice include

  • The tasks worked on
  • Number of hours worked on
  • Hourly rates
  • Starting and end date of the project
  • Admin fee etc.

Invoices Memos

9. Credit memo

If there is a mistake in the invoice, and the seller owes some money to the buyer, then the buyer sends a credit memo as an acknowledgment. It can also be used in several other situations as per the terms and conditions mutually agreed such as:

  • The order is canceled by the buyer
  • There’s a dama in the product and the buyer wants a refund.
  • The buyer is not satisfied with the client’s offers
  • The buyer wants to exchange it for something else
  • The seller offers a discount for early payment
  • Or it was just an error made while creating the invoice.

10. Debit memo

A debit memo is issued to the clients when the buyer owes extra money to the seller apart from the money mentioned in the sales invoice. This situation usually happens when the client offers last-minute changes or add-ons to the existing project. So the debit memo acts as a clear tool of communication and conveys the adjustments made in the invoice due to last-minute changes.

11. Mixed invoice

A mixed invoice is a mix of both debit and credit invoices. It includes the money owed by the seller and the buyer to each other. So the final value of the invoice can either be positive or negative. If it’s a positive number, then the buyer owes money to the seller and vice versa.


We hope that you now have gotten a general idea about the various types of invoices and which one to use and when. A general rule of thumb for any business be it a small business or a large one, traditional or freelance work, is always safe to collect payments in advance and document them legally in the form of invoices to be on the safer side.

You can always check Invoice Temple for various invoice template options and customize them according to your brand requirements. Looking for free invoicing software? Check out Invoice temple now, the E- invoicing software now!