An invoice is an invoice, except when it isn't. Ten variations exist in regular US small-business use, each with specific purposes, legal weight, and accounting treatment. Most service operators only use two or three of them, but recognizing all ten saves you from sending the wrong document at the wrong time.
This guide walks through each type, what it's for, and when to use it. Written for solo trades, freelancers, and small service businesses.
1. Standard invoice
The default. A standard invoice is what you send after work is performed or goods are delivered, requesting payment for the agreed-upon amount. It includes invoice number, dates, line items, totals, payment terms, and the client's contact info.
When to use it: 95% of small-business invoicing. One job, one invoice, paid in one transaction.
2. Recurring invoice
An invoice automatically generated and sent on a schedule, weekly, monthly, quarterly. Used for ongoing service contracts (lawn care, HVAC maintenance plans, cleaning), retainers, or subscriptions.
When to use it: any client paying you the same amount on a regular cadence. Saves manual invoice generation but requires explicit client authorization (some states require recurring-charge consent in writing).
3. Proforma invoice
A draft invoice sent before work is performed or goods are shipped. The proforma describes what will be delivered and at what price, but it's not a binding request for payment, it's closer to a detailed quote. The client uses it to arrange financing, get internal approval, or initiate customs paperwork for international shipments.
When to use it: B2B work where the client's procurement department needs a documented price before issuing a purchase order, or international shipments where customs requires a value declaration before goods cross borders.
4. Commercial invoice
A specific invoice format required by customs for international shipments. The commercial invoice declares the value of goods being shipped, the country of origin, the HS classification code, and shipping terms (FOB, CIF, etc.). Customs uses it to assess import duties and taxes.
When to use it: any goods crossing an international border. US-only service businesses rarely need this; product businesses shipping outside the US always do.
5. Credit memo (credit invoice)
A document that reduces or cancels a previously-issued invoice. Used when a client returns goods, when you overbilled by mistake, when a discount is applied after the original invoice, or when you're issuing a partial refund. The credit memo references the original invoice number and reduces the amount owed.
When to use it: any time the amount owed on a sent invoice needs to come down. Never edit the original invoice, issue a credit memo against it. The audit trail stays clean.
6. Debit memo (debit invoice)
The opposite of a credit memo, a document that increases the amount owed on a previously-issued invoice. Used for late fees, additional charges that came in after the original invoice was sent, or correcting an under-charge.
When to use it: rarely for small services. For most trade work, late fees can be added to the original invoice or recorded on a follow-up invoice referencing the late charge. Debit memos appear more in B2B accounting where the original invoice is in another company's accounts-payable system.
7. Progress invoice (interim invoice)
A partial invoice issued during a long project, billing for work completed to date. Common in construction, remodeling, and multi-phase service work where the full project takes weeks or months. Progress invoices are tied to project milestones (foundation poured, framing complete, drywall finished) or to a percentage of work done.
When to use it: any project lasting more than ~30 days where you can't afford to wait until the end for payment. Progress invoices keep cash flow steady and de-risk the project for both parties.
8. Final invoice
The last invoice on a project, settling the remaining balance after any deposits, progress payments, and retainage. The final invoice references all prior payments and brings the project to a $0 balance.
When to use it: completion of any project that had progress invoices, deposits, or retainage. The final invoice is the project's closing document; both parties usually keep a copy in their records permanently.
9. Timesheet invoice
An invoice based on hours worked at an hourly rate, rather than a fixed project price. Common for time-and-materials work, consulting, repair work where scope was unknown at the start, and any service billed in 15-minute or hour increments.
When to use it: scope can't be defined up front. The estimate becomes "$145/hour, estimated 4-6 hours," and the invoice reflects actual hours worked.
10. Retainage invoice
An invoice that bills for retainage, a percentage (typically 5-10%) of contract value withheld by the client until the project meets all completion conditions, including punch-list items and warranty period. Retainage is common in construction and general contracting.
When to use it: at the end of the warranty or punch-list period when the conditions for retainage release have been met. The retainage invoice releases the withheld amount and closes the project financially.
Picking the right type, decision tree
- Is this a quote or a real bill? Quote = proforma. Bill = standard.
- Is this for goods crossing an international border? Yes = commercial invoice. No = standard.
- Is this for ongoing recurring work? Yes = recurring invoice. No = one of the others.
- Are you adjusting a previously-sent invoice? Reducing = credit memo. Increasing = debit memo.
- Is this a project lasting more than 30 days? Phased work = progress invoice. Final settlement = final invoice. Holdback release = retainage invoice.
- Is this hourly billable work? Yes = timesheet invoice. No = standard.
- If none of the above special cases apply, use a standard invoice.
What most small trade businesses actually need
If you run a solo or small-crew service business, your real invoice mix is probably:
- Standard invoice, 85% of your work
- Recurring invoice, for any maintenance-plan customers (5-10%)
- Progress + final invoice, for any large project (multi-day remodels, install projects)
- Credit memo, once or twice a year when you need to refund or adjust
The other types (proforma, commercial, debit memo, retainage, timesheet) are real but niche. Recognize them so you don't get confused when a client asks for a "proforma" or your accountant mentions "retainage," but you'll rarely send them.