Types of Invoices: Standard, Proforma, Credit, and When to Use Each

Invoices are formal requests for payment from your business to another, so it’s important to get them right. However, the distinctions between different types of invoices and when to use them can trip some people up.

Sending the wrong type of invoice is not just an administrative error—it can delay your payments, cause headaches for your accounting team, and even violate compliance rules.

In this article, we’ll explain the different types of invoices and when to use them so you can keep your cash flow moving and stay compliant.

What Should an Invoice Include?

According to the UK Government, invoices must include:

• A unique “invoice number”

• Your company name, address, and contact information

• The company name and address of the customer you’re invoicing

• A clear description of the goods or services provided

• The date the goods or services were delivered

• The date of the invoice

• The amount being charged

• VAT amount if applicable

• The total amount owed

If you’re a sole trader, the invoice must also include your name and the business name you use, as well as an address where any legal documents can be delivered to you.[1]

Different Types of Invoices

Business invoices vary according to billing schedule, project scope, transaction type, and the goods or services delivered. We’ll break down the different types of invoices in clear terms, so you know which one is relevant to your project or sale.

Standard Invoices

This is the most common type of invoice issued by a business to a client or customer. A standard invoice is what you send after delivering goods or services 90% of the time, regardless of your industry and billing cycle.

The format of a standard invoice is pretty flexible, but it must include:

• Your business name and contact information

• The client’s name and contact information

• An invoice number

• The amount of money the client owes your business for the goods or services delivered

Most standard B2B invoices also include a payment deadline. For example, you may print “Net 30,” which means the client has 30 calendar days from the invoice date to pay the full amount.[2] You may also issue an invoice on 60-day terms.

The main problem with standard invoicing is the cash-flow gap. If you deliver on a huge project and issue a standard invoice on 30-60-day terms, you are essentially waiting a month or even two to get paid. In sectors like manufacturing where materials cost money upfront, that gap in your cash flow can seriously hinder your day-to-day operations.

Pro Forma Invoices

A pro forma invoice looks exactly like a standard invoice, but you send it before you have delivered the work. It is usually a preliminary cost estimate sent before work starts to outline expected charges and get approval from the client.[3]

A pro forma invoice is not an immediate demand for payment. Instead, it serves as a proposed blueprint for the project, listing how, when, and under what conditions the buyer is expected to pay. For example, if you run a UK SaaS company, your sales team may issue pro forma invoices to help clients secure internal sign-off for big annual software licenses.

There are some clear differences between pro forma and standard invoicing:

• A pro forma invoice is not a demand for payment

• You don’t need to include an invoice number

• It must be labelled as a pro forma invoice

• You should also include a validity period or expiration date to protect your business from future price fluctuations or changes in scope

• A pro forma invoice is not legally binding

When the project is complete, or the goods are delivered, your business should issue a final invoice. This is the official, legally binding document that requests payment for the remaining balance of the project, and it should establish a payment deadline for the client.

Recurring Invoices

Recurring invoices are ideal for businesses that rely on retainers, memberships, or software subscriptions. For example, you might run a marketing company that charges a flat fee for ongoing social media management, or a software company that auto-bills users once a month for a platform subscription.

These types of invoices work differently because they don’t rely on a project ending. Instead of manually generating a new invoice every time you deliver work, you set up an automated system that issues the recurring invoice on a fixed schedule (e.g., weekly, monthly, or annually).[4]

If you run a small- to medium-sized business, having clients on a recurring invoice arrangement is valuable because it shows lenders that you have a predictable stream of income. You can find out more about this in our guide to how recurring revenue unlocks cheaper working capital.

Credit Notes and Debit Notes

In business accounting, you cannot edit or delete an invoice once it has been sent to a client because this destroys the audit trail. Instead, you can use credit and debit notes to add or subtract value to correct mistakes or add extra charges.

Credit notes are negative invoices that reduce the amount a client owes. They can also be used as a credit voucher against a future purchase. For example, you might send a credit note when a client sends back damaged or unwanted goods and you need to refund them, or if you accidentally bill them too much and need to correct the mistake.

Debit notes act as an addition to the invoice. This tells the buyer that you are increasing the amount they owe you. Debit notes might be used to fix an undercharging error or add extra scope or materials that weren’t covered on the original invoice. Staffing firms often use debit notes in the recruitment sector when temp hours exceed the original estimate.

Comparing Invoice Options