In Transaction > Sales > Create Sales Order > New, when billing a sales order it leads to a cash sale invoice.
Factors that affect Billing Sales Order are Terms and Payment Method. Payment Method takes precedent over terms and a Cash Sale will be generated instead of Invoice.
To confirm:
1. Create a copy of a Sales Order with payment method selected in Billing tab.
2. Remove the payment method in the Billing tab.
3. Click Save.
4. Click Bill.