When you are creating a new invoice for your small business, or as a freelancing agent, you have a few options. Whether you are creating the invoice through the old school Excel spreadsheet method, or the much improved solution i.e. a cloud-based accounting software such as Xero, you may create the invoice from scratch, or through one of the pre-designed templates. When selecting a personal invoice template, you want to create an invoice that suits all the requirements of your business and your clients. For the purpose of recording accounts payable and accounts receivable, you can break down the types of invoices into the following.
Standard invoice: This is the most common type which is very straightforward and simple. This invoice should outline how much the client owes the supplier (i.e. your business).
Pre-payment invoice: A Pre-payment invoice should be sent a client for the collection of a deposit on services that are to be but not yet provided from the supplier to the client, or product that are sold (on a pre-order basis) but not yet delivered from the seller to the customer.
Recurring invoice: Often a service provider may have to give services to a client on an ongoing basis that stretched past multiple months, depending on the actual nature of the project. This invoice type should be used to accept this type of ongoing payments from the client during the service period. Another example could be for a subscription-based magazine where the customer has purchased a 12-month subscription from the magazine publisher. Each month an invoice will be sent to this customer.
Credit invoice: A credit invoice is sometimes known as a credit memo or credit note. This invoice tells how much you owe your client. This may happen when your client asks for a refund of a service that he/she has subscribed but somehow this client changes his/her mind. So a refund may have to be processed.
Debit invoice: This invoice shows the increase in the amount of debt the client owes your business.
Time-based invoice: Your business may use a time-based invoice to bill a client for the tracked time for performing work or services for the client.
Mixed invoice: The invoice includes both positive and negative amounts that must be matched with other invoices or orders for fees your business owe your clients, or your clients owe your business.
Besides using Xero as the main bookkeeping app/software for daily invoicing, a small business may also consider other similar alternative such as Quickbooks, invoicely, or Freshbooks.