The global invoicing market is predicted to process 550 billion invoices every year. The expectation is that the size will quadruple by 2035.
In 2019, around 55 billion invoices have been prepared in a paperless format. The estimation is that the global electronic invoicing size will reach Euro 4.3 billion, and it will peak at an approximate amount worth Eur 18 billion by 2025.
Japan Invoice System
The Invoicing System in Japan is known as a ‘Qualified Invoice Preservation Method. It is stated in the Consumption Tax Law. Qualified Invoice or QI meets the tax requirement, which is indicated in the CTL.
It is released to business owners who have officially registered with the Tax Institute as Registered Business Operators (RBOs).
Their registration is not automatic, even if the business is filing for tax. The tax body approves the registration. Only taxable BO can register. The exempted business operator cannot register. It has to make a tax election to be a taxable business operator to register.
Types of Invoice
1. Pro forma invoice
It is not utilized to request for money. It is more or less like a pre-invoice that a service provider sends before the completion of a job for a client. The client can see his or her bill once the product has been delivered or services performed. As a Japanese business operator, you can use it to value gift items.
In most cases, it estimates the product’s value and the cost of each product. Nevertheless, you can change the terms and conditions in the invoice as the project continues.
2. Interim Invoice
This type of invoice specifies the worth of a more significant project into different layers. A business operator can send it as the project progresses.
A larger project usually requires additional labor, material, as well as operating expenses. Entrepreneurs can easily manage their cash flow when they have large jobs instead of waiting for project completion before receiving payment. The money can be used to cover the implementation of the project.
3. Final Invoice
More like the name, you send it after you have completed the project. The client can see the work that has been accomplished. In comparison to pro forma invoices, you use it to request for the fund. It usually incorporates the list of items and solutions provided. It also covers aggregate cost, due to the time frame, as well as the payment methods.
The best way to maintain a positive cashflow is to always send a final invoice as soon as possible through email or other online platforms.
4. Past due invoices
In some cases, your clients forgot to pay by the expected date stated on the final invoice. In this situation, what you send to them is called a past due invoice. You can add any late payment charges or interest to penalize clients who failed to pay before or on the due date.
If sending a past due invoice does not generate the expected result, you can employ a different strategy to facilitate payment. These may include establishing a payment plan, making an adjustment on the terms and conditions for payment, or subcontracting a collection agency.
5. Recurring invoice
They are utilized to bill clients for recurring services. You bill the same amount periodically, just like in utility bills.
It also works well in subscription-based ventures. You can utilize them if your clients or members pay a subscription to your website or company. For instance, if you own a web hosting platform with yearly subscription, recurring invoices are your best option.
6. Credit Memo
A credit memo is utilized in the place of billing a client. It is useful in the acknowledgment of a debt owed. It is more or less the equivalent of the amount on the initial invoice. It can be utilized when clients returned products, or goods were damaged in transit. It is useful for refunding the client who has paid.
7. Standard Invoice
These are invoices that small businesses typically submit to their clients. They prefer it since the format is incredibly flexible and can fit almost any industry and billing cycle. Here are the components of a typical standard invoice:
- Business name
- Business’ contact information
- Client’s name and contact details
- The invoice number
- The amount owed to the business
8. Commercial invoice
A business can issue a commercial invoice for the goods that it sells across international borders. They include the details that are necessary for determining custom duties for sales. The most important details that must feature on your commercial invoice are:
- Total value
- Packaging format
- Weight/Volume
- Shipment quality
- Description of goods
9. Timesheet invoice
Timesheet invoices are designed to take care of the billing needs of business owners who offer services that are best paid depending on the time worked. Whenever you want to bill for the services you offer based on your standard pay rate or hours worked, you can opt for this invoice.
In most cases, contract employees who their bosses pay on an hourly basis find timesheet invoicing an excellent option. But you are also highly likely to find it in other industries where professionals are happy to bill based on time. Some of the expert specialists that typically use timesheet invoice are:
- Creative agencies
- Psychologists
- Lawyers
- Business consultants
10. Debit Memo
A debit memo, also known as a debit invoice, is a document that businesses that intend to adjust the amount their clients owe them upwards use. Small businesses and freelancers find these invoices essential for their day-to-day operations.
Sometimes, these businesses have to slightly adjust an existing bill, especially after discovering that the work requires more effort than expected. If you estimated that you need five hours to complete your client’s blog post but end up working for one more hour, you could need this. Send a debit invoice and request payment for the additional hour.
However, unlike credit memos, or credit invoices, debit invoices are always written in positive numbers.
Final Thoughts
As a focused, well-informed business person, you need to know the difference between these types of invoices. Many clients love to work with people who are knowledgeable and can professionally ask payment. Once you understand the differences, you can create your invoices alone, download custom-made options online, or ask an expert to help you design one that suits your business.
