Invoices hold an important place during financial processes of a business, serving as a formal record of transactions for products or services. While invoices are mainly used as payment requests, did you know that they can vary in many types? From pro forma to recurring invoices, knowing the differences is crucial, but managing them manually is no longer efficient. Relying on manual data entry, for instance, is very time-consuming and prone to mistakes.
This article will provide you a complete guide, exploring the 7 most important types of invoices and how you can automate invoice data extraction the right way.
Proforma Invoices
A proforma invoice provides an estimated total price when requesting certain products or services. This type of invoice is issued by a seller to a buyer before the actual transactions and generally acts as a quotation. With this definition, a proforma invoice is not an official document for payment request. Instead, it only helps the buyer understand how much they will have to pay for the planned order.
Commercial Invoices
A commercial invoice plays a key role in international shipment, both for exporting and importing. It serves as a customs declaration for every package with commercial value. During customs inspection, this document is required to prove that the transaction is legal and to avoid packages from being held. Additionally, it also provides the necessary information for tax calculation.
Sales Invoices
This is the most common type of invoice used in business. A sales invoice is essentially a billing document that details the transaction dates, list of products or services provided, their quantities, prices, and the total amount due. Sellers typically send this invoice to accompany product delivery to buyers. But, there are also some sellers that issue the invoice first, demanding buyers to make payment prior to shipment.
Read: How to Input Invoices to Excel Automatically
Recurring Invoices
To request payment for ongoing services, there is a different type of invoice known as a recurring invoice. This invoice is designed for repeated payments such as monthly property rent, premium subscription charges, gym or club membership fees, and utility bills. The product or service provider will send this invoice regularly as a payment reminder, ensuring customers make timely payment.
Overdue Invoices
When payment for an invoice is not received on time, it can disrupt the company’s cash flow. This is when an overdue invoice is issued to follow-up payment from customers. An overdue invoice may include additional charges, such as late fees or interest, which must be paid along with the original amount due.
Credit Invoices
A credit invoice, or credit note, is issued to reduce the amount a customer owes. It is commonly used for refunds, discounts, or correcting billing errors. This document helps maintain accurate accounts and ensures both parties agree on the adjusted amount. Credit invoices also provide a clear record for future reference.
Debit Invoices
On the contrary, a debit invoice, or debit note, is issued to increase the amount a customer owes. It is typically used when additional charges are necessary due to underbilling or extra services provided. Debit invoices help keep financial records accurate and transparent.
Bonus: How to Automate Invoice Data Extraction
Manually inputting various types of invoices can create several challenges and slow down a company’s ability to scale. By automating invoice data extraction with Fintelite, businesses can achieve various efficiency gains. From accelerating payment cycles, eliminate delay due to manual errors, and improve overall financial processing efficiency. Fintelite streamlines the process by automatically capturing important information from invoice, then directly integrating them into existing accounting systems.
