Invoice processing, payment clearance, delivery of goods- all related to smoothing functioning of a business. Business does not only depend upon earning revenue. It requires various things and several services for its operation. Therefore, invoice payment is an obvious scenario no matter what business you are in.
Here in this article, we will discuss invoice payment and how to make an invoice payment for the easy functioning of your business.
Take a quick look at what all have been covered in this article!
Let’s dig in!
What is an invoice payment?
An invoice is a financial document that is issued by the seller to the buyer requesting the payment after the completion of the project or delivery of goods. It includes the itemized list of products or services provided with quantity and price. Businesses, whether small or big may need supplies or require specific services to run the business. In such cases, often businesses need to pay invoices to clear the amount due and that is what invoice payment is.
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How to make invoice payments on time
Here are some useful tips that would help you to make your invoice payments on time.
1. Recheck your invoices before you pay:
A little doubt is always beneficial, especially when it’s business. Recheck or review the invoices as soon as you receive them from your vendors. Adapt this process as a habit to avoid any misunderstanding. As the purchases are fresh in mind, it won’t take much time to cross-check. Rechecking the invoices also reduces the chances of your invoice getting misplaced.
What do you need to look for while reviewing an invoice?
Invoice due date:
Mark it in your data book with the invoice number or vendor’s name, so that you don’t miss out on the payment deadline.
Cross-check the services or goods provided:
The invoice contains a list of services offered or products supplied with respective costs. Get your doubts cleared by checking out the list once.
It is fine that you have your calculation done. So check the total cost before you pay your vendor. If you face any issue with the amount, inform the vendor immediately before it’s too late.
2. Opt for the right payment mode:
Choosing the right and most convenient payment method makes your work easier. Verify from your vendor what payment method they accept. Opt for the easy and smart mode like credit card or online transfer that best suits your business. But make sure you don’t miss the payment deadline.
3. Arrange the invoices as per your payment timelines:
Whether invoices you receive or you pay, organize each as per the due date to keep track of all paid and unpaid invoices. Maintaining an excel sheet or implementing a cloud-based invoicing system to maintain the invoice data. This makes your work more organized and would prevent invoices from piling.
4. Create alerts to avoid missing out on invoices:
You wouldn’t like to pay a late fee, just because you missed the day due to some work. Well, try out this! Set reminders or create digital alerts for your invoices. This will help you track your invoices and notify you weeks before you approach the due date.
5. Automate your invoice payment:
Automate your invoice payment to ensure that your business never misses out on any invoices. If you have a recurring invoice, then you can automate the process, so that it gets deducted from your credit card or bank account at a specific date set by you. This way your invoices get paid automatically, and you stay tense less without worrying about missing the payment deadlines.
6. Process your invoice payment before the due date:
If you have analyzed your vendors closely, then you would find at least a few of them who will offer an early payment discount. Try to process your invoices before the due date so that you can avail a special rebate.
7. Opt for an invoice filing system:
Sticking to an invoice filing system is a smart way to avoid disputes on invoice payments. An invoice filing system helps to keep a track of the invoice details like payment amount, date, and method. Implementing such a methodology helps to monitor the payment confirmation details, which eventually smoothens your business finances by avoiding awkward situations.
When should be invoice be paid
Businesses must set strict payment terms to mitigate the risk of delayed payment and must encourage clients to settle the due amount on time. Check credit reports before extending terms. Also, you can offer early payment discounts and incentives and can impose late fees as a penalty for delayed payment.
Invoices must be paid within 15, 30, or 60 days, whatever the term is, which is also known as Net-15, Net-30, or Net-60. To know more about payment terms check out our article on Net-30 Payment Terms.
What does it mean to process an invoice?
From incoming invoices to the payment clearance, the entire phase is known as invoice processing. There are two types of invoices- one which is related to a PO and the other which is not.
- First, the invoices arrive online or offline mode.
- The account payment department categorizes its type and sends it to the concerned person.
- Next, the details are verified with the documents that the client has.
- Once the invoice is approved and signed by the concerned person, it is recorded into the accounting system.
- Finally, with the payment of the invoice, the process gets completed.
How to pay an invoice?
Check out the below section to know what are options available for invoice payment, and choose the one that best fits your small business.
Automatic bill payment:
Online bill payment is the most suitable option that offers a tension-less payment procedure. This is a service that is offered by the bank that lets your small business pay off their bills easily. Moreover, this also saves a lot of time and effort. This method is much helpful for recurring payments and ensures that you are never late in paying your bills. You just need to make sure that you have a sufficient balance in the account. Here is the process for it!
- Organize all the invoices that you need to pay and keep a note of the account numbers related to them.
- Go to your bank’s online payment platform and enter the payees’ names and account numbers to register it.
- Set a specific date as per your convenience for invoice payment. Note: The money will get deducted on the date mentioned by you.
- Select what type of payment you want- single or recurring.
- Reminders help you to track your invoice dates. Hence, set a reminder to never miss out on the payment dates.
Payment by cheque is an old-school method. It is safe and secure but time-consuming at the same time. Moreover, you need to be cautious while filling it.
Cash payments are a nice and easy way to pay off your small invoice amounts. But this is not a good idea if you are thinking of clearing your large invoices. The chances of theft or getting misplaced is high for this mode of payment. Try avoiding this payment method for huge amounts.
Online mode – credit or debit card:
The digital payment system has come up with credit card as well as debit card payment modes. Both ways offer you an easy and safe payment process. They provide a high level of security for online payments, which safeguards your data and gives a safe transaction.
This is also a safe and faster way of clearing your payments. You can pay the invoice amount through a mobile transaction that may involve a credit card, debit card, or even through various online platforms available as mobile apps.
Invoice payment is not a tension anymore. Take out time, settle down all your dues and focus on your business growth without worrying about payment deadlines. What’s your take on this?