11 INVOICING TERMS EVERY

SMALL BUSINESS & FREELANCER SHOULD KNOW

IntroductionIt’s very difficult to establish and grow your businesses without important financial vocabulary.

That’s why many small business owners and freelancers put off financial responsibilities until their businesses creak and groan.

It’s nearly impossible to have a successful business without getting familiar with some accounting vocabulary. These are the 11 most important invoicing terms for small businesses and freelancers.

1. Recurring Invoice

Sometimes you’ll need to send invoices not one time, but on a regular basis. This could be if:

• you are providing web hosting services, • you do gardening and cleaning• any other kind of monthly service that has the same price

Recurring invoicing allows you to send an invoice automatically any period according to your need. InvoiceBerry makes it easy to set up your recurring invoices.

When you are busy getting customers, or customers send requests to you, you’ll need to send them a quote, quotation or estimate. It should have:

• the price, • a breakdown of how you’ve determined the price • a time schedule

InvoiceBerry makes it easy for you to turn your quote into an invoice with just the click of a button.

2. Quotes & Estimates

3. Proforma Invoice

A proforma invoice is comparable to a quote/estimate. More specifically, it:

• is the price that you and the customer have already agreed upon

• a binding agreement before goods are delivered

Think of a quote or estimate as “I hope we can deal” and a proforma invoice as “the deal is done.”

4. Interest Invoice

An interest invoice is an invoice sent after a customer is late on payment. The invoice is created with only the interest listed and will include:

• the time period • the month or months of missed payment • the interest on those missed payments

Charging a customer interest and creating an interest invoice, however, is a sensitive issue.

5. Fiscal Year

The fiscal year, or financial year, is determined by each business. This may coincide with your tax or accounting year, although it is not necessary.

Different industries generally set different fiscal year periods. For example, if you are in a highly seasonal business, you would set your fiscal year to coincide with your seasons.

This way the fiscal year ends after the season ends, and not in the middle.

6. Expenses

There are four types of expense important for you to know:

• fixed expenses, consistent on a monthly, yearly basis• Variable expenses are determined by the business• discretionary expenses are “wants” not “needs”• operating expenses, the costs that your business needs in

order to operate

7. Tax summary

A tax summary is a summary of your taxable amount and a total value of the taxes you have paid on that amount for a specific period.

Individuals may also get their personalized tax summaries from their governments on a yearly basis.

In InvoiceBerry, it’s easy to create your tax summary report for any time period.

7. Tax summary 8. Item Revenue

Item revenue is a review of the revenue created by a specific item.

On online invoicing software such as InvoiceBerry, it is easy to check the item revenue for a certain time period.

It allows you to determine how much revenue a specific item that you’ve created (such as ‘Wedding Photographs’ or ‘Yard Cleaning’) earned for that period.

9. Profit and Loss Statement

A P&L lists the revenues, costs and expenses for a specific time period. This time period is usually your fiscal year, or it could be a fiscal quarter (for larger companies).

In the UK, if you’re a sole trader or limited company making more than £50,000 a year, you’re required to submit one to the HMRC.

InvoiceBerry has free P&L templates by clicking here.

10. Cash Flow Statement

The cash flow statement shows how much cash and cash equivalents have gone through the company. It includes:

• operations lists how much cash inflows and outflows have been generated by the business product or services

• investing relates to equipment, buildings or short-term assets

• financing concerns debts, loans and dividends

Download our free Cash Flow Statement here.

11. Balance Sheet

It is used to describe a company’s financial position at a certain point in time, and is often referred to as a “snapshot” of the company’s financials. It lists:

• the company’s assets • the liabilities and obligations• the business owner’s financial involvement

InvoiceBerry’s free balance sheet template can be found here.

11 Invoicing Terms Every Small Business &

Freelancer Should Know

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