To help you navigate the far-reaching world of invoicing (and help you get paid on time), here are 7 useful terms you should know.

1. Invoice

An invoice is simply a commercial document that lists all the amounts owed to the seller by the buyer.

In short, when a client orders products (or services) from you, you issue them with an invoice, which is a request for payment. Typically, an invoice contains an itemized list of the amounts owed, as well as any taxes, additional expenses, etc. It also includes the date by which payment should be made and how and where to send it.

You can view our free invoice templates here.

2. Purchase Order

A purchase order is not an invoice but a document from the buyer of services (your customer or client) to order a set of deliverables or items from you. Once you have received a purchase order, you can commence work and send your invoice at the agreed time.

The purchase order is sent at the start of the process, and the final invoice effectively completes the cycle.

You can also create purchase orders to order services or products from your vendors.

With Invoice Ninja, you can create purchase orders to email to your vendors. When they are approved, they can be converted into expenses. Expenses can be re-billed to clients or used to run helpful financial reports.

3. Quote

A quote is a document detailing your proposed services to your client and the price you’ll charge if accepted. A quote is not an invoice. However, they can kick off the process, and it’s handy if, when accepted, they can be easily converted into an invoice. (Incidentally, though similar, estimates are not the same as quotes. The key difference is that a quote is a fixed price, whereas an estimate is an approximate price that may change in the future.)

Fortunately, with Invoice Ninja, when you email quotations to your clients, they can “Click to Approve” the quotation, which then converts the quote into a payable invoice!

Invoices can be paid online with 1-click, and your account documents all the steps.

4. Payment Terms

Payment terms cover the agreed dates of payment of your freelancer invoice.

There are various payment terms, but the most common ones are Net 30 (meaning you get paid within 30 days from the date of invoice), Net 7 (7 days) or even Net 60 or longer. You can also offer clients a percentage discount using this terminology if they pay early. For example, 10% 15 Net 30 means they’ll get a 10% discount if they pay within 15 days instead of 30 days.

Due on receipt means the payment is due immediately on receipt of the invoice. EOM stands for End of Month. You might also want to set up a specific date for when you get paid each month – this is especially useful for long-term clients and recurring invoices.

Your payment terms should include your payment schedule, i.e. when you get paid, as well as payment method (how you get paid). You should also stipulate if you have a late payment or refund policy. Your payment terms form part of your freelancer contract/written agreement.

5. Deposit

A deposit is a sum of money paid in advance for the work agreed upon. It can be a proportion of the total amount due or even 100% upfront. Deposits work well with large projects, so you get a sum upfront. You can also get paid at intervals throughout the project (known as milestone pricing).

You may want to consider asking for a deposit for new clients, or you might want to charge 100% upfront for smaller sums and a proportion for larger projects. The project’s scope, timing, and norms in your industry will likely determine your best option.

Invoice Ninja’s partial payment feature is ideal if you require a partial deposit upfront. After your client pays the partial payment (deposit), the invoice will automatically update itself with the balance due and set a new final invoice due date.

6. Recurring invoice

A recurring invoice is one that you send to the same client each month where the details and amount you charge don’t change. These can be especially helpful for long-term retainer clients.

You can save time with Invoice Ninja by automatically billing long-term clients with recurring invoices. Auto-billing is a feature that enables the payment system to capture your client’s bank card details and store them for billing at a future date.

7. Payment Gateway

If you want to get paid fast online, you’ll want to make use of a payment gateway that allows your clients to pay you securely. The payment gateway is the tech that allows this to happen.

Invoice Ninja offers multiple payment gateways you can choose from, and when your client pays you, they don’t even need to leave their Invoice Ninja client-side portal and can pay you with just one click.

Take a look at all the payment gateways we offer on the page here.

Try Invoice Ninja out for free here.