Do you have your own business? Work as a freelancer or run a side hustle? If you answered yes to any of these questions you need to know which invoices to use. Read on to learn more.

Understanding the Importance Of Invoices

Invoices play an integral role in the everyday running of any business or entrepreneur. They’re what gets you paid and create a paper trail for tax purposes, your customer, and yourself. However, many new business owners, especially those running small to medium-sized companies, become confused about the creation and administration of invoices.

There are so many different types of invoices that the lines between choosing the correct one for
your business can get blurred.
As a business owner or entrepreneur, you’ll need to understand the benefits of different invoice
types and templates to choose the right one for your needs.

But, before we get into specific invoice examples and templates, let’s ensure that you know exactly
what an invoice is, and how to apply it in the business sense as someone looking for entrepreneurial
growth.
Invoice Basics
In the simplest of terms, an invoice is what any business issues to customers after delivering a
product or service.
The invoice tells the customer exactly how much they need to pay for the service or product
provided, what each one costs, and what taxes are included. It also includes payment terms such as
the due date and payment information such as banking details.
Why Invoice Templates Make Running A Business Easier
If you’re running a small or medium size business you’ll know just how valuable time is. Every second
counts and tasks that are repetitive and laborious can cost you money.
If you’re doing your invoicing yourself, or even if you have an employee that takes care of your
accounting, invoice templates can streamline, simplify and speed up the process. Each template
includes all the basic information that’s required, and all you need to do is fill in the line items and
sales details. This makes drawing an invoice up far faster, and also ensures that you don’t leave out
important information like payment terms or banking details.
Additionally, it creates a feeling of cohesion for your customers, which builds trust and loyalty.
Now that you know what an invoice is and why you need templates, let’s get into some examples
that your small or medium-sized company can use to collect funds owed.
1. Pro-Forma
A pro forma invoice is one that’s prepared by your business and sent to a customer before a service
is rendered or goods are sold. These invoices help customers to estimate the price of services and
decide whether or not to proceed with the purchase.
Pro forma invoices are most often used in the commercial sense by bigger companies that make
large volumes of sales to big customers. However, they’re also becoming increasingly popular for

small businesses as they help to create an environment that ensures short-term survival and regular
cash flow.
2. Standard Invoices
Standard invoices are ideal for most small companies or one-man entrepreneurs. A standard invoice
is exactly what it sounds like. It’s a straightforward document that includes a few important details
relevant to the transaction. These details include a brief description of the goods sold or the services
rendered.
Standard invoices, as expected, also include the cost of the goods or services rendered that are
payable by the customer.
Other essential details in a standard invoice include the business’s contact details should the buyer
have any queries, along with the customer’s contact details, an invoice number for tax reasons, and
payment terms. These are the most popular types of invoices as they suit businesses in all sectors
and cover almost every transactional situation.
Despite the description given above, invoices don’t only get issued for the standard buying-and-
selling scenario. There are many different types of transactions and situations that also require an
invoice. This is where credit invoices, debit invoices, and mixed credit and debit invoices come into the
equation.
3. Credit Invoice
A credit invoice, also known as a credit note, gets issued by companies when they owe a customer
money. This money may be for a refund or discount, and it provides proof that the customer has a
positive balance with the business. However, unlike other forms of credit, it doesn’t usually allow for
the accrual of interest.
A credit invoice is a document that notes the price reduction owed by the company and is generally
used to write off or reduce the balance owed by the customer. It’s issued before a regular invoice
and it may be valid for some time until a transaction of the same amount or more is completed.
4. Debit Invoice
A debit invoice is the exact opposite of a credit invoice, starting with the fact that it’s always issued
by the buyer to the company, entrepreneur, or seller as evidence for the return of goods or services.
In other words, it marks the writing off of a balance owed by the buyer to the seller.
These types of invoices are provided to sellers by businesses upon the request of a customer that
wants to return goods. The seller (business) will either pay the money on the debit invoice or write a
credit note to the customer in return.
5. Mixed Invoice
Now, what about a mixed credit and debit invoice?
You may think that it’s impossible for these two invoices to get combined as they must both get
issued by separate parties. However, a mixed credit and debit note has become popular in the
business world as a time-saving mechanism and a nifty tool to conclude small deals quickly.
This makes mixed invoices perfect for small to medium businesses that are looking to cut costs and
focus on short-term growth.

In essence, a mixed invoice is a combination of both of the invoices mentioned above. In a situation
where these types of invoices are issued, it’s most likely that a debit and a credit invoice gets sent by
both parties.
So, instead of doing this, many parties tend to create a mixed invoice that includes all the essential
credit and debit details, and simply have both parties sign off on it at some point.
Concluding Remarks
It’s abundantly clear that any small or medium business needs to know how to make an invoice. But
beyond that, every business needs to have templates for each of the most common invoices
mentioned above.
In doing so, you’ll streamline your accounting processes, satisfy customers, and speed up
transactions—making turning a profit easier.