Growing your company abroad is a significant achievement, but it comes with complications when it comes to collecting and transmitting cross-border payments. Issuing invoices and tracking payments are two further considerations for global freelancers and independent contractors when billing clients worldwide.
Finding the appropriate means of paying invoices for businesses paying overseas suppliers of goods and services is critical to maintaining relationships with vendors and keeping costs on international money transfers low. Payoneer provides invoice payment solutions that allow businesses to pay and receive payments quickly, easily, and from any location.
Now that you have a new service or product to offer, you need to work out how your clients will be paying for the invoices. Whether you are a freelancer or own a business, the payment method and who it is beneficial for are important. This article explores the different invoice payment methods and what each of them offers for freelancers and businesses.
What Exactly is an Invoice Payment?
Invoice payment is money delivered by a company (the customer) to a supplier (the vendor) to pay for goods or services received. A planned payment toward the amount of goods and services supplied is referred to as an invoice payment. An invoice is a document that details the products or services sold and requests payment.
In most cases, the date, a unique invoice number, quantity, and VAT information are also supplied. Your business will send invoices to your consumers, which will prompt payment for the product or service you provided. Ensure you follow this approach exactly to enhance your chances of being paid on time and prevent embarrassing interactions with your consumers.
What are the Terms of Invoice Payment?
Depending on your cash flow and financial responsibilities, the conditions of an invoice payment will vary. You have complete control over your payment arrangements and due date. If you don’t specify a payment deadline, the consumer must pay you within 30 days after receiving your products or service invoice. You might provide discounts for early payment and full payment to promote prompt action.
Why Choosing the Best Invoice Payment Method is Important?
Offering a variety of payment alternatives to customers makes good business sense – it cuts down on wait times, eliminates trouble, and makes your organization more appealing to customers.
Customers will perceive your commitment to making things easier for them if your organization offers a range of payment alternatives. Customers will be more inclined to pay faster and sooner if they have additional payment options.
With smart gadgets and applications dominating the digital landscape, a substantial percentage of customers rely on them to do business and make payments to businesses. Finally, when billing your clients, include precise payment terms to ensure prompt payment and improved cash flow.
Payment terms help you to get paid swiftly, estimate your company’s cash flow for better budgeting, and avoid payment disputes later on. However, before sending out an invoice, think about the payment conditions you’re using, as this could result in late payments or unreasonable deadlines for your clients.
To meet the needs of customers & clients, the foremost aspect a business or service provider must focus on is offering a wide range of invoice payment methods. Payment methods need to be easier to access & feasible for both parties for smooth business transactions.
Also for small businesses, timely payments are important to maintain a healthy cash flow. For quick and easy payments from the client, your choice of invoice payment method & proper invoice payment terms plays a vital role.
Different Invoice Payment Options to Include in Invoices
When invoicing you want to do it in the most hassle-free & efficient way possible, from using an online builder to generate professional invoices to using the best payment methods. For payment methods, each business and client has its preference. There are quite a few payment methods that can be added to the invoices that businesses easily accept and pay through. From cash or bank transfer to online payments or debit cards, we explain the pros, cons, best practices, and use-cases of the most used invoice payment methods for freelancers and businesses.
Credit & Debit Cards
Making in-store or in-person payments or setting up your card for online transactions, credit cards serve as an easy & convenient invoicing payment method. All you need is to open a merchant account via your bank or set up a payment gateway to accept credit/debit card payments. Card payments are fast, & relatively secure, though a bit costly as the payer is charged a transaction/processing fee. Clients can pay online with a Credit Card with a Billing Service provided by PSPs like Payoneer, making credit and debit cards a valid choice for businesses, e-commerce sellers, freelancers, clients, & customers alike.
Online payments are certainly the most used invoicing payment method for freelancers, small businesses, and online sellers. You can get paid online via online/global payment solutions, to your debit/credit card, local bank accounts, or even cash wallets. Payment platforms & PSPs like Payoneer, GooglePay, TW, etc. allow clients and customers all over the world to send payments internationally in multiple currencies. Signing up on these payment platforms is quite easy and they allow you to get the payments quickly and safely in your business & individual accounts in a couple of days. Payment methods like Payoneer are also linked with popular e-commerce & freelance marketplaces such as Upwork, Amazon, Fiverr, Airbnb, etc. making it one of the best online payment solutions for freelancers, clients, & sellers.
Bank transfer is one of the standard invoice payment methods for businesses to receive international payments. It is usually classified into two most common types – ACH transfer & wire transfer. To receive payments from your client’s bank account to your own, correct bank details such as Bank’s name, Account/IBAN no, or sort code, etc. must be included in an invoice. Bank transfer is one of the more secure, low fees, & low failure payment options for accepting client payments.
Mobile payments are an increasingly popular invoicing payment method because it’s fast, secure, & convenient. Mobile payments are a preferred option for on-site businesses & service providers such as contractors. You will require a mobile payment reader linked to a smartphone to process payments via apps. A fee is charged for each transaction & payments are transferred in a few days to the account.
Cash is the most common payment method for street-side businesses that offer services & products. It’s the option that comes with no processing time or transaction fees. Cash is also prone to theft, and accepting cash may require tax auditing as fewer paper trails are linked to cash. Payments in cash are also hard to track and automate. Being a feasible yet insecure payment method, it is not always the preferred invoice payment method for B2B businesses and online freelancers.
Mainly for service-providing businesses check is still one of the more popular payment methods. When it comes to paying invoices, checks are a time-consuming payment method as they need to be mailed to the payee. Checks can also be used to handle payments via money orders. Though cheap and less at risk of theft than cash, checks are still prone to fraud. Some issues related to checks as a payment method are:
i. No guarantee if the associated bank has enough money.
ii. Payments can bounce which can disrupt the business flow.
iii. Checks may take several days for a check to clear.
iv. Formalities in matching the KYC during money withdrawal.
An automated payment automatically delivered from your bank or credit card account to one of your billers is known as an automatic payment. Your credit card, debit card, savings, checking, or money market account can all be used to set up automated bill payments. The biller automatically collects the amount due for payment as per your payment plan.
Automatic recurring payments are best for timely payments if you & the client prefer payments on a set schedule. Every month a specific amount is charged on a specific date with the permission of the client. Your invoices will never be unpaid after the deadline. An accounting software & payment solution can be used to set up automatic payments. It also allows the client to not have to remember about payment date and amount, just make sure they have the required balance to make the payment.