An invoice payment is a scheduled payment a customer makes toward the balance of goods and services rendered.
An invoice is a document showing details of any goods or services sold and requests an amount payable for these services.
It will also normally include the date, a unique invoice number, quantities and information about VAT. Payment details and credit terms are also often included.
Invoices are issued by your business to your customers and they will trigger the payment for the product or service you have supplied.
Make sure you get this process right to increase your chances of getting paid on time and avoid awkward conversations with your customers.
Invoice payments can be made and requested in many ways.
The popular route for many businesses is sending invoices electronically, or e-invoicing.
E-invoices are emailed to the customer with the same details as the paper version, and they include a way for the customer to pay the invoice directly from the invoice.
You can also use your accounting software to manage your invoicing.
Common invoice requirements
Your invoice should include everything that the receiving party might need to process your invoice. This limits the chances of your invoice being paid late because of missing information.
Your invoices should include these basic components before you take the step to process an invoice:
- Your company name
- Your trading address
- Methods of contact (your name and how to get hold of you, should there be a query)
- What your customer bought (a description – don’t forget, the buyer may not receive your invoice, but just be asked to sign off the amount)
- Who ordered the goods (this is not mandatory but it can help)
- An invoice number (your file number, for easy reference)
- The date (don’t forget this, it’s vital)
- How you’d like to be paid (another hugely important element but one a large number of people forget)
- Credit terms (i.e. payable immediately, or within 7, 30, 60 days, etc)
- The amount you are charging
- Your bank details (very important if you want to receive the money)
- Any stage payments
- Whether VAT is applicable
What are invoice payment terms?
The terms of an invoice payment will vary, depending on your cash flow and financial obligations. You can set your own payment terms and any due date that you choose.
If you don’t set a payment date, the customer must pay you within 30 days of receiving your invoice for the goods or service.
You can also offer discounts for early payment and payment upfront to encourage prompt action.
Create an invoice that looks professional and provides the person receiving it with all the information they need to know.
This will give you the best chance to get paid on time and reduce the chances of being paid late or you needing to chase an unpaid invoice.
Remember, many companies have a department that is one step removed away from the person who made the buying decision.
See our free invoice templates as an example of a customer invoice that you can use for your business.