Client invoice is one of those things that may appear flimsy. Except a client specifically is requesting one, you might never find it a necessity to provide one. If you are new to freelancing, this is probably one of the first things to consider. As a seasoned professional needing a reason to provide one, however, here is everything you need to know about client invoices. From understanding its meaning, the types, why you need to create one, and how you can create a client invoice.
What is a client invoice?
A client invoice or invoice is a document representing details regarding a service or product purchase. This for the part of a client creates an obligation to pay for a purchase and for the business details regarding what was sold and what is expected. Providing invoices for clients have tremendous benefits for both a business and its client. As a freelance professional, there isn’t quite any difference between you and a business owner. In fact, nothing quite shows professionalism like a freelancer that provides clients with invoices.
Types of invoices
Contrary to common beliefs, there are quite the types of client invoices. These are classified based on the business type as well as the purpose. These include the following:
Standard invoice
This is the most common type of client invoice used virtually by most businesses and professionals today. It is also the most flexible invoice type that can be used by almost all businesses and professionals. A standard invoice typically contains.
- Invoice number
- Business details
- Client details
- product/service information
- Amount due
Credit invoice
A credit invoice also known as a credit memo is an invoice type used to offer clients a discount, a refund, or fix a previous invoicing error. This invoice type always comes with a deficient total balance.
Debit invoice
A debit invoice also called a debit memo is the opposite of a credit invoice. This invoice type is used to correct a previous invoice in a case where you have to add more zeros to a previously issued invoice. This is commonly used by freelance professionals when they have to correct originally billed hours. As freelance professionals, it’s common to go above-stipulated work hours. A debit invoice is used to notify clients of the additional hours or bills incurred.
Mixed invoice
A mixed invoice is a type of invoice used in cases where you have to perform the function of a debit and credit invoice together. This is used for cases where you probably need to give a client a discount while also billing extra hours for work that wasn’t included in a previous invoice.
Commercial invoice
This is a type of client invoice used for goods/products shipped overseas. This invoice includes details of sales in order to obtain fees on custom duties for cross-border shipment. A commercial invoice includes the following.
- Shipment quantity
- Weight / volume
- Description of goods
- Total value
- Packaging format
Expense report
An expense report or invoice is a type of invoice issued by employees to an employer for reimbursement. These are cases where employees have to spend their own money on company expenses. The invoice showcases what money was spent in order for reimbursement to be processed.
Timesheet invoice
A timesheet invoice is used for hourly contracts. As a freelance professional working on an hourly basis, this is the type of invoice sent over to clients for payment. This typically contains your agreed hourly rate and the number of hours worked in a stipulated period. This of course is for those who do not use time tracking software.
Pro forma invoice
A pro forma invoice is a client invoice type used to inform a client about a service or product’s proposed cost. For example, this is what you send over to your client to inform him of the estimated number of hours a project will require. The final receipt can defer from the number estimated on a pro forma invoice.
Recurring invoice
This is the type of invoice required when you offer a fixed service price to a client. This means that month by month, nothing changes on your invoice.
E invoice
An E-invoice is any of the aforementioned invoices sent electronically. As a freelance professional working with clients all over the globe, you require E-invoices for all transactions.
Why bother providing client invoice
Record
Invoices serve as records for both a business and its clients. As a business or service professional, this is how you know how much you are owed and how much you make.
Professionalism
All businesses provide client invoices. Many professional freelance professionals also do the same. Providing one might not make you one of the top tiers, but it’s a step in the right direction. As you grow, this will help you better track your growth and previous clients you have worked with.
Legal protection
An invoice is a legally binding document that tells the third party a transaction was made. This helps protect both merchants and buyers against fraudulent claims.
Tax filing
Not reporting your appropriate earnings will affect your tax, which can affect your business during an audit. To avoid tax complications from the IRS, client invoices provide exact records of just how much needs reporting.
Business analysis
Many businesses make the mistake of not tracking earnings. This hinders business growth even as a freelance professional. Starting out can be tough but growth is imminent. Being able to track exactly what you charge and what you make will help your growth. You can analyze where your business has been and where it currently is to adequately plan for the future.
How to create a client invoice
Creating an invoice is as easy as pushing the power button in a Tesla when you know what to do. There are many templates out there that require lot of time to edit to make a single invoice. However, service providers like paystubsnow provide easy and fast online access to creating an invoice. Click here to create one now.
Why choose Paystubsnow
Paystubsnow is an industry leader in financial documentation. From client invoices, checkstubs, 1099, and more. You can create each with only a few clicks of a button on paystubsnow. These documentations are crucial when seeking a loan, dealing with the IRS, and for a number of reasons.
FAQ: What does invoicing mean
What does invoicing mean?
Invoicing is the process of providing a client with a document outlining details regarding a purchase. This can be done via electronic mediums or physical documentation.
Can an invoice be used to ask for payment from a client?
An invoice serves as a legally binding document showing a client how much they owe. This is also a medium of requesting payment due from a client.
How are client invoices paid?
Once invoices are issued, clients are required to pay the due sums to the merchant’s preferred method of receiving payment. This could be through PayPal, Stripe, or physical cash.
How to issue an invoice
Invoices can be issued in person, faxed, or emailed. Emailing is the most common method of issuing invoices today.
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