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Billing vs. Invoicing: Which One is Best for You?

Earning money and paying bills is the main motivator that makes people work. If there are no bills to pay at the end of every month, many people will happily quit work. As a business owner, you might be sending out bills at the beginning of every month or you might send out invoices. But, do you know the difference between billing vs. invoicing?

Most of you know about the invoice definition. In this blog, we have mentioned the difference between invoices and bills rather than just mentioning invoice definition. It will help you make the billing process smooth and you get paid easily from your customers. So, keep reading until the end of this blog.

What are the Various Types of Invoices?

Based on the invoicing definition, here are some invoice and bill examples that will help you understand the types of invoices businesses can generate and send to their customers.

Various Types Of Invoices

Standard Sales Invoice

The standard sales invoice and a bill is the kind of invoice that businesses create and send to the customers for sale of their merchandise or services. Different industries can easily adapt it to their needs because of the flexibility of the format. This is the most common sort of invoice in use for purchase orders.

Credit Invoice

The businesses generate a credit invoice or credit memo to correct a previous calculation error for purchase orders, provide a refund to the client or for giving a discount to their customers. A credit invoice will always have a negative amount, like -$200.

Commercial Invoice

Some businesses create a commercial invoice when they make a sale of their goods or services internationally based on purchase orders. It contains transaction details that are necessary for the clearance of shipment on the borders.

Timesheet Invoice

This type of report needs to create when the customer is charged on an hourly basis. The total number of hours, the tasks carried out and the per hour rate should be there in the timesheet. This helps the customer understand how much they are charged and for what work.

Expense Report

Expense reports include extra expenses such as traveling cost, food and hotel, fuel expenses, cell phone charges, and any other additional expenses. An employee can send such a report to his employers or a company can directly send this to the client.

Pro Forma Invoice

Pro forma is a cost estimation that is sent by a company to its customers before beginning the work. This type of invoices and bills helps the client understand the approximate amount that one will need to pay them when they complete the project. However, it does not serve as a contract or as an obligation for the buyer to supply the complete balance in advance.

Interim Invoice

If a project is too long and is lasting for some months, it becomes difficult for everyone to keep track of the expenses. For this reason, the company keeps sending interim invoices after regular intervals. It helps in creating a final statement for the project and keeps an account of the transaction.

Final Invoice

The addition of all the previous receipts’ amounts is the final invoice sent to the customer at the end of the project. This is an in-detail list of all the costs and deductions made during the project and the actual amount that the customer has to pay.

E-Invoicing (Electronic Invoicing)

An e-invoice is a digital file with data in a structured format that the buyer’s system can comprehend for a particular purchase order. There is no need to manually add data of goods and services to this e-Invoicing file by either of the parties to understand the bill.

Digital Invoicing

Businesses can create digital invoices digitally only and generate them with the help of an online invoicing system. It is usually available in PDF or Word format, but it can also be a scanned paper invoice bill.

Invoicing vs. Billing: Major Difference between Billing and Invoicing

Although both terms are often used interchangeably, there are some key differences that set them apart from each other. We consulted experts in the invoice finance industry and the following are the major differences between the two.

It is the term used by businesses that are collecting payments from their clients.Clients usually refer to the invoices as bills when they are making the payment.
Invoices usually include the name and address of the customer.Bills are usually general in nature and just contain the amount and details, without any personalization factor.
Invoices have an extended credit limit and the customer makes the complete payment a few days after receiving the invoice for a product or service.Bills are mostly paid upfront and immediately, with no extension on the credit limit.
Lawyers, accountants, wholesalers tend to send invoices to their clients.Bills are usually given at restaurants or salons.

Tips For Making Better Invoices

  • Pick a good billing and invoicing software (take a free trial before paying) that justifies the services provided.
  • Use appropriate invoice number, contact details, and total amount to have immediate payment.
  • Establish payment terms and refund policies to avoid confusion in the later stages.
  • Professional and error-free invoiced designs should be used to help you create a better impression on your customers.
  • Be polite and use words like thank you and please. For example, you can include sentences like, “Please make the complete payment within 15 days. Thank you for your cooperation.”
  • Take outside help if needed for creating the invoices, for accounting purposes or for collecting money from defaulters.

Frequently Asked Questions

1. What are invoicing details?

The details included in an invoice document like date, address, line items, amount, and taxes.

2. What is the process of invoicing?

Invoicing process is the entire process that business owners implement when generating invoices for their clients or customers.

3. How long do invoices take to process?

Business owners can set up their own terms, provide discounts for early payments and a penalty for late payments. However, if no terms are there between the businesses and the client then the payment should be made within 30 days.


Now that you know the key features and elements of invoices, it is easier for you to generate your own invoices for your customers. It is the most important thing that this process will help you to receive payments faster, manage finances, streamline workflow and also reduce any mental pressure regarding payments.

We at MixBit always try to provide you with more details on invoicing. By using our tips for creating better invoices, it becomes possible for you to send correct details to your customers.

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