11 Invoicing Terms Every Small Business & Freelancer Should Know

11 INVOICING TERMS EVERYSMALL BUSINESS & FREELANCER SHOULD KNOW



IntroductionIt’s very difficult to establish and grow your businesseswithout important financial vocabulary.That’s why many small business owners and freelancers putoff financial responsibilities until their businesses creak andgroan.It’s nearly impossible to have a successful businesswithout getting familiar with some accounting vocabulary.These are the 11 most important invoicing terms for smallbusinesses and freelancers.

1. Recurring InvoiceSometimes you’ll need to send invoices not one time, but on aregular 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 priceRecurring invoicing allows you to send an invoice automaticallyany period according to your need. InvoiceBerry makes it easyto set up your recurring invoices.

2. Quotes & Estimates 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.

3. Proforma InvoiceA proforma invoice is comparable to a quote/estimate. Morespecifically, it: • is the price that you and the customer have already agreed upon • a binding agreement before goods are deliveredThink of a quote or estimate as “I hope we can deal” and aproforma invoice as “the deal is done.”

4. Interest InvoiceAn interest invoice is an invoice sent after a customer is late onpayment. The invoice is created with only the interest listed andwill include: • the time period • the month or months of missed payment • the interest on those missed paymentsCharging a customer interest and creating an interest invoice,however, is a sensitive issue.

5. Fiscal YearThe fiscal year, or financial year, is determined by eachbusiness. 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 wouldset your fiscal year to coincide with your seasons.This way the fiscal year ends after the season ends, and not inthe middle.

6. ExpensesThere 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 summaryA tax summary is a summary of your taxable amount and a totalvalue of the taxes you have paid on that amount for a specificperiod.Individuals may also get their personalized tax summaries fromtheir governments on a yearly basis.In InvoiceBerry, it’s easy to create your tax summary report forany time period.

8. Item RevenueItem revenue is a review of the revenue created by a specificitem.On online invoicing software such as InvoiceBerry, it is easy tocheck the item revenue for a certain time period.It allows you to determine how much revenue a specific itemthat you’ve created (such as ‘Wedding Photographs’ or ‘YardCleaning’) 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 SheetIt is used to describe a company’s financial position at a certainpoint in time, and is often referred to as a “snapshot” of thecompany’s financials. It lists: • the company’s assets • the liabilities and obligations • the business owner’s financial involvementInvoiceBerry’s free balance sheet template can be found here.

Read our full article by following the link below: 11 Invoicing Terms Every Small Business & Freelancer Should Know

LEARN MORE ABOUT INVOICEBERRY’S ONLINE INVOICING SOFTWARE InvoiceBerry simplifies invoicing and expense tracking, helping you save your time and money. You can create your first invoice in under 60 seconds. Send Track Create Manage Track Multi-invoices expenses reports clients payments currency LEARN MORE SIGN UP