What Is an Invoice? Types, Examples, and How It Works in Business

An invoice is a formal document issued by a seller to a buyer requesting payment for goods sold or services provided. It clearly mentions what was sold, how much is payable, and when the payment is due.

Invoices are used by businesses worldwide to manage payments, maintain transparency, and keep accurate financial records.

Businesses today create invoices using online tools available in the Invoice Generator hub, which helps ensure accuracy and professional formatting.

How an Invoice Works in Business

The invoice process usually follows a simple workflow:

The seller delivers goods or completes a service
The seller issues an invoice to the buyer
The buyer reviews the invoice details
The buyer makes payment as per the invoice terms

Once the payment is completed, businesses usually issue a receipt as proof of payment. Receipts are created using tools available in the Receipt Generator hub.

What Information Does an Invoice Include?

A professional invoice typically includes:

Seller business name and contact details
Buyer information
Invoice number
Invoice date
Description of goods or services
Quantity and pricing
Applicable taxes
Total amount payable
Payment terms

Using a Free Invoice Generator ensures these details are added correctly.

Types of Invoices Explained (With Examples)

1. Sales Invoice

A sales invoice is used when selling products to customers. It is commonly generated using a Sales Invoice Generator.

2. Service Invoice

Service providers such as consultants and agencies issue service invoices using a Service Invoice Generator.

3. Proforma Invoice

A proforma invoice is issued before delivery to confirm pricing and terms. It does not request payment and is widely used in international trade.

You can create one using the Proforma Invoice Generator.

4. Tax Invoice

Tax invoices include tax details such as GST or VAT. Businesses use tools like the Tax Invoice Generator for compliance.

5. Recurring Invoice

Recurring invoices are used for subscription-based or ongoing services and can be created using the Recurring Invoice Generator.

6. Export and Import Invoice

Exporters and importers use specialized invoices for cross-border trade, such as the Export Invoice and Import Invoice.

Invoice vs Receipt: What’s the Difference?

Invoices and receipts are often confused, but they serve different purposes:

Invoice: Requests payment from the buyer
Receipt: Confirms that payment has already been received

For example, after issuing an invoice and receiving payment, a business may generate a receipt using the Cash Receipt Generator.

Invoice vs Quotation vs Proforma Invoice

These documents are used at different stages of a transaction:

Quotation: Price offer before agreement
Proforma Invoice: Price confirmation before delivery
Invoice: Payment request after delivery

The differences between these documents are explained in detail in this guide: Difference Between Invoice and Quotation.

When Should You Issue an Invoice?

You should issue an invoice when:

Goods have been delivered
Services have been completed
You expect payment from the buyer

Invoices should not be issued before work is completed unless it is a proforma invoice.

Why Use Online Invoice Generators?

Manual invoices created in Word or Excel often result in missing details and calculation errors.

Using online tools from the GoSetle® Invoice Generator helps businesses:

Create invoices faster
Automatically calculate totals and taxes
Download professional PDF invoices
Maintain consistency across documents

Conclusion

An invoice is a critical business document that ensures sellers get paid and buyers understand their payment obligations.

By using the correct invoice type and generating invoices through tools available on GoSetle®, businesses can improve cash flow, reduce disputes, and maintain clear financial records.

Read Related Article :-

>> Proforma Invoice Template: What to Include (Global Standard Format)

>> Common Proforma Invoice Mistakes That Cause Payment Delays

>> Can You Request Payment Using a Proforma Invoice? What Businesses Should Know

>> Proforma Invoice vs Commercial Invoice vs Quotation: Key Differences Explained

>> Proforma Invoice Generator – Meaning, Format, Example & Online | GoSetle®

>> How to Make a Receipt for Cash Payment (Step-by-Step Guide with Example)

>> How to Make an Itemized Receipt (With Examples and Best Practices)

>> How to Generate a Rent Receipt Without Watermark (Free & Printable PDF)