Types of Invoices: A Guide to the Main Kinds and When to Use Them

"Invoice" sounds like one thing, but in practice businesses issue several distinct kinds, each with its own purpose, accounting effect and sometimes legal meaning. Using the wrong one can confuse customers, delay payment or cause tax problems, for example when a pro forma is treated as a tax invoice, or when an issued invoice is edited instead of being credited.

This guide walks through the main types of invoices, what each is for, what it should contain, how it is recorded in the books and the common mistakes. For the basics of what any invoice contains, start with what is an invoice. Tax rules about invoice types vary between countries, so check the requirements where you are registered.

Quick reference

Type	Purpose	Requests payment?	Creates a receivable?
Standard invoice	Bill for goods or services supplied	Yes	Yes
Pro forma invoice	Preliminary statement of expected charges	Sometimes, for prepayment	Usually no
Deposit or prepayment invoice	Request advance payment	Yes	Depends on rules and timing
Interim or progress invoice	Bill part of a long project	Yes	Yes
Final invoice	Bill the remainder at completion	Yes	Yes
Recurring invoice	Regular billing for ongoing supply	Yes	Yes
Timesheet invoice	Bill hours worked	Yes	Yes
Credit note	Reduce or cancel a previous invoice	No, reduces amount owed	Reduces it
Debit note	Increase a previous charge, or a buyer's claim	Sometimes	Varies
Commercial invoice	Customs document for exports	Yes, and used by customs	Yes
Self-billing invoice	Issued by the customer on the supplier's behalf	Records the supply	Yes, for the supplier
Simplified invoice	Reduced details for low-value sales under tax rules	Yes	Yes
Consolidated invoice	Several supplies in one invoice	Yes	Yes
Electronic invoice	Structured data exchanged between systems	Yes	Yes

1. Standard invoice

The everyday invoice: issued after goods are delivered or services performed, it lists what was supplied, the amounts and tax, and requests payment by a due date. In accrual accounting, it records revenue and a receivable for the seller and an expense or asset with a payable for the buyer. In VAT and GST systems, it is usually the tax invoice that allows the buyer to reclaim input tax, provided it contains the required details.

Use when: you have supplied goods or services and want payment.

2. Pro forma invoice

A pro forma invoice is a preliminary document showing what the seller expects to charge, sent before the supply is made. It resembles an invoice but is generally not a demand for payment of a completed sale and not a tax invoice. Common uses:

• Giving the buyer a formal price to arrange payment, financing or internal approval.
• Requesting prepayment before goods ship, especially to new or overseas customers.
• Supporting import paperwork, where customs or banks need an indication of value before shipment.

Pro forma invoices are not usually recorded as sales in the books. If the buyer pays in advance, the seller records a customer deposit (a liability) until the supply is made, when a standard invoice is issued.

Mistake to avoid: numbering pro formas in the same sequence as tax invoices, or allowing buyers to reclaim tax on them. Use a separate series and label them clearly "Pro forma, not a tax invoice".

3. Deposit or prepayment invoice

Some businesses issue an invoice for a deposit or advance payment, for example 30% before work starts. The tax treatment of advance payments varies: in some VAT systems, receiving a deposit creates a tax point for that amount, which means a tax invoice may be required. The final invoice then shows the full amount less the deposit already invoiced.

Use when: you require payment before starting work or ordering materials.

4. Interim or progress invoice

Long projects, such as construction, software development or consulting engagements, are often billed in stages. Interim invoices bill for work completed so far or for milestones reached:

• Percentage of completion: billing a proportion of the contract value as work progresses.
• Milestone billing: fixed amounts when defined milestones are met.
• Time and materials to date: hours and costs incurred in the period.

Construction contracts may involve retentions, where the customer withholds a percentage of each interim payment until completion or the end of a defects period. Track retentions separately so they are not forgotten.

Worked example

A contractor agrees a 120,000 fit-out with 5% retention, billed monthly on progress:

Month	Cumulative completion	Cumulative value	Less retention 5%	Less previously billed	This invoice (before tax)
April	25%	30,000	28,500	0	28,500
May	60%	72,000	68,400	28,500	39,900
June	100%	120,000	114,000	68,400	45,600

After June, 114,000 has been billed and 6,000 is held as retention, invoiced when the retention period ends.

5. Final invoice

The final invoice closes a project. It summarises the total contract value, deducts deposits and interim invoices already billed, and requests the balance. It should reference earlier invoices so the customer can reconcile everything.

6. Recurring invoice

Recurring invoices bill the same or similar amounts at regular intervals: monthly subscriptions, retainers, rent, maintenance contracts. Most accounting software can generate and send them automatically on a schedule you set.

Points to watch:

• Changes: price increases, upgrades and cancellations must update the template.
• Pro-rating: partial periods when customers join or leave mid-cycle.
• Payment collection: recurring invoices pair well with direct debit or card-on-file payments.

7. Timesheet invoice

Service businesses billing by the hour attach or summarise timesheets: who worked, on what, for how long, at what rate. Clear time descriptions reduce disputes and approval delays. "Drafted supply agreement, reviewed client comments, call with supplier's counsel" is far easier to approve than "Legal work, 6.5 hours", and makes it less likely the client will query the bill.

8. Credit note (credit memo)

A credit note reduces or cancels an earlier invoice, for example after returns, overcharges, discounts agreed afterwards or a cancelled order. It should:

• Have its own number, usually in a separate sequence.
• Reference the original invoice.
• Show the amounts and tax being reversed.

The seller records a reduction in revenue and receivables; the buyer reduces the expense and payable. Credit notes are the correct way to correct invoices because they preserve the audit trail. Editing or deleting issued invoices can create tax compliance problems.

Worked example

An invoice for 2,400 plus 20% VAT (total 2,880) included 4 units at 150 that were returned. The credit note is for 600 plus VAT of 120, a total of 720. The customer now owes 2,160.

9. Debit note (debit memo)

Debit notes are used in two ways, depending on business practice and country:

• Issued by a seller to increase an amount previously invoiced, for example for undercharging. Many businesses simply issue an additional invoice instead.
• Issued by a buyer to a seller to record a claim, such as for returned goods or a shortfall, often prompting the seller to issue a credit note.

Because usage varies, label debit notes clearly and reference the original invoice.

10. Commercial invoice

A commercial invoice accompanies international shipments of goods. Customs authorities use it to assess duties and taxes, and it typically includes:

• Exporter and importer details.
• Detailed description of goods, quantities and values.
• Commodity codes (such as HS codes).
• Country of origin.
• Incoterms, which allocate costs and risks between buyer and seller.
• Currency and payment terms.

Inaccurate commercial invoices cause customs delays and penalties. Logistics providers and customs brokers can advise on requirements for specific countries.

11. Self-billing invoice

In a self-billing arrangement, the customer prepares the invoice on behalf of the supplier, typically where the customer knows the quantities better, such as a manufacturer paying for supplied components based on goods received, or a platform paying contributors. Tax systems that allow self-billing usually require a written agreement and specific wording on the invoice. The supplier must not issue its own invoice for the same supply.

12. Simplified invoice

Some VAT systems allow simplified invoices with fewer details for low-value supplies, often below a specified amount. They may omit the customer's details, for example. Retail receipts sometimes qualify as simplified invoices. Thresholds and rules vary by country, and buyers may need a full invoice to reclaim tax above the threshold.

13. Consolidated or summary invoice

A consolidated invoice combines several deliveries or services over a period into one invoice. Customers with frequent small orders often prefer this, because it reduces the number of documents to approve and pay. Each underlying delivery should still be identifiable.

14. Electronic invoice (e-invoice)

An e-invoice is a structured, machine-readable invoice exchanged between systems, in a format such as a UBL or other XML standard, often through networks such as Peppol or government platforms. A PDF emailed as an attachment is not an e-invoice in this sense. Many countries are introducing e-invoicing mandates. See e-invoicing explained for details.

Other documents often confused with invoices

Document	What it is	How it differs
Quote or estimate	Offer of a price before the sale	Not binding as a request for payment
Purchase order	Buyer's formal order	Issued by the buyer, before the invoice; see purchase order vs invoice
Delivery note	Lists goods delivered	No prices, or prices not for payment
Receipt	Proof of payment	Issued after payment; see invoice vs receipt
Statement of account	Summary of open invoices	Reminds rather than bills new supplies
Past-due notice	Reminder for an overdue invoice	Refers to an existing invoice

How buyers handle each type

Invoice types matter just as much to the accounts payable team receiving them:

• Pro forma invoices should not be entered as bills. If a prepayment is required, many AP teams record it as a prepayment or supplier advance, then match it against the final invoice when it arrives.
• Deposit invoices should be tracked so the deposit is deducted when the final invoice comes in. Paying the full final amount without deducting the deposit is a common overpayment.
• Interim invoices need checking against the contract and, for construction, against certified valuations before approval.
• Credit notes must be applied, either by deducting them from the next payment or requesting a refund. Unapplied credit notes are money left on the table.
• Recurring invoices deserve periodic review, because subscriptions continue after the need has gone.
• Consolidated invoices should be checked against each underlying delivery or purchase order line.

Matching invoices to purchase orders and goods received is covered in our guide to three-way matching.

Invoice types in accounting software

Most accounting software supports the common types under slightly different names:

Invoice type	Typical software feature
Standard	Invoice or sales invoice
Pro forma, quote	Estimate, quote or pro forma template that converts to an invoice
Deposit	Deposit invoice, prepayment or progress invoice feature
Interim and final	Progress invoicing or project billing
Recurring	Recurring or repeating invoice schedule
Credit note	Credit note, credit memo or refund receipt
Debit note	Supplier credit request, or an additional invoice
Consolidated	Batch invoicing or invoicing multiple delivery notes

Using the software's own feature for each type, rather than improvising with standard invoices, keeps the ledger and reports correct. For example, a credit note created as a negative invoice may not link to the original, making reconciliation and tax reporting harder.

Choosing the right invoice type

Ask:

1. Has the supply been made? If yes, a standard, interim, final or recurring invoice. If no, a pro forma or deposit invoice.
2. Is this correcting an earlier invoice? Use a credit note (to reduce) or an additional invoice or debit note (to increase).
3. Is it an export of goods? You need a commercial invoice for customs as well.
4. Who prepares it? If the customer, it is self-billing, with an agreement in place.
5. Does your tax system or customer require e-invoices? Then the format matters as well as the content.

How invoice types affect bookkeeping and reconciliation

Different invoice types produce different patterns in the bank:

• Deposits and final invoices show two receipts for one project.
• Retentions arrive months after the main payments.
• Credit notes reduce payments, so a deposit may be smaller than the original invoice.
• Consolidated invoices mean one payment covers many deliveries.

When reconciling bank deposits to invoices, references and remittance advices are essential. If you are working from PDF bank statements, convert them to a spreadsheet or import file with a bank statement converter and match payments against your list of invoices and credit notes. See how to reconcile a bank statement.

Common mistakes

• Treating a pro forma as a tax invoice, or recording it as revenue.
• Editing issued invoices instead of using credit notes.
• Mixing numbering sequences for different document types.
• Forgetting retentions on construction contracts.
• Self-billing without an agreement or while the supplier also invoices.
• Incomplete commercial invoices that hold goods at customs.
• Recurring invoices that keep running after a customer cancels.

Frequently asked questions

What are the most common types of invoices?

Standard invoices, pro forma invoices, interim and final invoices for projects, recurring invoices, credit notes, debit notes, commercial invoices for exports and electronic invoices. Each serves a different purpose in the billing process.

Is a pro forma invoice a real invoice?

Not in the accounting and usual tax sense. A pro forma is a preliminary document showing expected charges, often used to request prepayment or support import paperwork. A standard invoice is issued once the supply is made.

What is the difference between a credit note and a debit note?

A credit note reduces the amount a customer owes, usually after a return or overcharge. A debit note either increases an amount owed or, in some practice, is a buyer's notification of a claim against a supplier. Usage varies, so reference the original invoice clearly.

What is an interim invoice?

An interim invoice bills part of a project's value before completion, based on progress, milestones or time spent. The final invoice later bills the remaining balance.

What is a recurring invoice?

A recurring invoice is generated automatically at regular intervals for ongoing supplies, such as subscriptions, retainers or maintenance contracts. Accounting software creates and sends it on a schedule, and it pairs well with automatic payment collection.

Can I issue a credit note without the original invoice?

A credit note should reference the invoice it corrects, so it can be matched and the tax adjustment is clear. If you are reducing a balance across several invoices, list each one or apportion the credit, rather than issuing a credit note with no reference.

Do I need a commercial invoice for international shipping?

For exports of goods, customs authorities typically require a commercial invoice with detailed descriptions, values, origin and commodity codes. Requirements vary by country, so check with your carrier or customs broker.

Summary

Choosing the right type of invoice keeps billing clear, accounting accurate and tax compliant: standard invoices for completed supplies, pro forma and deposit invoices before the supply, interim and final invoices for projects, recurring invoices for subscriptions, credit and debit notes for corrections, commercial invoices for exports, and simplified, self-billing or e-invoices where rules allow or require.

When it is time to match all those invoices to payments, StatementPilot turns PDF bank statements into spreadsheets you can reconcile against your invoice list.