Invoice payment is money exchanged for a service or product sold. The seller issues an invoice, and the customer pays the bill. It is part of the accounts payable process, and is also often referred to as bill pay.
While this sounds simple, figuring out how to pay an invoice can still be tricky.
This article will cover how to pay domestic and international invoices on time, using different methods.
Pay international invoices with Wise
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This piece has been written in collaboration with Esther Friedberg Karp, an esteemed bookkeeper and QuickBooks ProAdvisor. |
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How to pay an invoice: Different methods for payment
When it comes to paying invoices, you need to select the right payment method.
The method you choose can make a difference in fees, speed, and practicality.
How do I pay an invoice online?
To pay an invoice online, have your debit or credit card details on hand and enter them when prompted. There may be the extra step of authenticating the payment through a third-party security platform, too.
If you choose to pay an invoice online, the payment should go through swiftly. You wonât have to rely on slow and expensive postage, as you may with a check - especially if itâs an international invoice.
With some banks, such as US Bank, you have an online Bill Pay option to pay all your invoices and bills online in a single place.š This way, you wonât be pulling your hair out tracking down invoices to pay across various websites and platforms.
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Pay your bills with QuickBooks and Wise
If you have international bills to pay, not only can you pay them at the mid-market rate with Wise, but now you can also sync Wise with QuickBooks. This can help you have a clear overview of your unpaid bills.
You can see your unpaid bills in real time and pay them seamlessly from your âBillsâ page on Wise.
Your bill payments and any other Wise transactions will be synced, matched and categorized in QuickBooks for simple reconciliation.
Once connected, all bills you create in QuickBooks Online will automatically sync in real time to Wise, where you can choose which ones to pay.
Sound amazing? Join Wise Business and see for yourself how much time and hassle you can save. |
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Invoice payment by check
While it may seem old-fashioned to some, itâs still possible to pay an invoice by check.
With this method, you must remember to dot the iâs and cross the tâs, since thereâs no taking it back once youâve sent it. Youâll want to include a copy of the invoice youâre paying and the invoice number, too. This helps the recipient identify the payment.
The other factor to consider with paying by check is the time it takes to reach its destination. If you fail to factor in postage time, then you may have to pay a late fee.
How to pay an invoice with a credit card
If you choose to pay an invoice with a credit card, you need to make sure that you have enough funds and donât end up in debt.
If you pay an invoice thatâs issued in a different currency, you could pay a hefty currency conversion fee. This can be higher than the mid-market rate, at times.
It often works out cheaper to use a service such as Wise - which can save you time and money.
How to pay an international invoice
If you need to pay an international invoice, you might ask yourself which method is best.
Any of the methods listed above can work, but they will often involve fees and take a long time to process.
Even for online invoice payments.
While paying invoices online is one of the most convenient methods, you still might end up with unexpected bank fees.
You can set up a local account to avoid conversion fees. This isnât without its complications, especially if you aren't a dual citizen of the country in question.
Luckily, thereâs a solution that can save you money.
Wise is here to equip you for business on an international scale. You can get local account details (routing number, IBAN, sort codes and more) in up to 9 countries and pay like a local.
Check out Wise Business
How to pay an invoice on time - Top tips
Itâs essential for your reputation that you pay invoices promptly.
It demonstrates professionalism and will always be appreciated on the other end. If that isnât enough motivation to pay an invoice on time, there is also the threat of late fees affecting you and your supplierâs or contractorâs cash flow.
Here are some tips for paying your invoices on time:
Keep a schedule for your invoices
Invoices are a vital part of any businessâ day-to-day, so try to develop a schedule that keeps you accountable for invoice payments.
Itâs ok if you donât have the organizational skills to do this yourself. Most businesses today use invoicing software like QuickBooks or an invoicing app. This can help make the process easier.
Most of these tools send you automatic reminders and payment links meaning youâll be able to complete the payment on time, in one click.
Set up recurring invoice payments
If you need to pay regular invoices, it can be a good idea to set up recurring payments.
If the amount you need to pay a supplier each month, for example, is fixed, then a recurring payment will take care of your payments to that supplier in an arrangement that suits you both.
Some businesses even incentivize early payments with discounts. You could schedule your payments a day or two before the deadline to save some money.
For international payments, you can also set up recurring payments, and mass payouts in over 70 countries with Wise.
Pay in the agreed currency
The moment you pay in a currency other than that specified in the invoice, you will incur currency conversion fees. These can be significant, as you donât always get the mid-market rate.
As such, you should try to pay in the agreed currency by using a multi-currency provider, such as Wise.
With Wise, itâs possible to create local account details for 10 different currencies, so you can pay invoices like a local.
How to get a customer to pay an invoice
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Research shows that companies are 30% more likely to get paid if they offer easy online invoice payment.² |
If youâre on the other side of the invoice process, and you struggle with how to get a customer to pay an invoice, here are some things you can do.
Firstly, establish a clear payment date on the invoice you send.
Thereâs evidence from a study carried out by Xero that adding a shorter payment deadline can motivate customers to pay faster, even if they miss that deadline.Âł Customers paid in 13 days on average when an invoice was sent with a one-week due date. With a three-week due date, payment was only received on day 25.
Another good idea is to provide the customer with various payment method options.
Electric invoices, for example, can help speed up invoice payments.
The issuing of electronic invoices can help guarantee prompt payment in a few ways:
Sending the invoice online means the customer gets the invoice immediately;
Offering online payment methods make the process as seamless as possible.
You can also include the option to pay in the local currency if you use a flexible international payment service such as Wise.
If payments are still arriving late, why not incentivize early payments by offering discounts if the customer can pay within 14 days, for example?
You could also go the other way and include late payment fees in your payment terms for past due invoices. Though of course this approach can be perceived as hostile by some, and could even cost you a customer or two.
đĄUsing a free invoice template or invoice generator from Wise can be helpful if youâre unsure how to lay out your invoices. |
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How to pay invoices like a local with the Wise Business account
With the Wise Business account, you can get local account details in multiple currencies to streamline the international payment process. Wise can also save you money.
Register a Wise Business accountin minutes!
Having the option to pay invoices in the local currency makes things more convenient for your suppliers or contractors. It also makes it easier to pay your invoices on time.
You can see all your currencies in one place and move money around easily for international payments.
đĄ For all you need to know about invoices, don't forget to read and bookmark the ultimate guide to invoicing from Wise! |
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Sources:
All sources checked 23 December 2022.
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