What is an invoice payment? A guide to paying bills on time

8 min read
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Understanding how to pay the invoices that you receive from suppliers is one of the foundations of running a small business. Paying invoices efficiently and on time will help you to build and maintain the positive relationships that are vital to your long-term success. 

In this blog post, we’ll look at everything from how to make sure you pay invoices on time to your options if you refuse to pay an invoice that is being disputed.

What is an invoice payment?

An invoice payment is money that’s sent by a business (the customer) to a supplier (the vendor) to pay for products or services that it has received.

Every small business should have an efficient and consistent process for paying the invoices it receives from its suppliers. If they don’t, they risk incurring late payment fees and damaging the relationships they have with their suppliers.

How to make invoice payments on time

In the UK, a total of £23.4 billion is owed to small and medium-sized businesses in late invoice payments. That’s damaging the cash flow of businesses and making it difficult for them to operate effectively, which is why it’s so important that businesses of every size take responsibility for paying their invoices on time.

Here are some simple steps you can take to pay your suppliers’ invoices promptly:

Review invoices as soon as you receive them

Reviewing invoices as soon as they’re received will make sure they don’t get forgotten or misplaced. You should pay close attention to the payment due date and ensure the total cost aligns with the conversations you’ve had with the vendor.

Set payment reminders to avoid late fees 

You can easily create payment reminders with QuickBooks’ automated invoicing system to make sure the invoices you receive are paid on time. That will help you to avoid late payment interest charges and fees. 

Choose the right payment method 

The payment methods accepted by the supplier should be listed on the invoice. You should choose the most convenient payment method for you based on your current circumstances. For example, if cash flow is low, paying by credit card might be the best option. Or if the supplier is invoicing you regularly then a recurring payment option like Direct Debit might save you both some time.

Automate invoice payments    

If you need to pay a supplier on a regular basis, you can set up an automatic recurring payment with QuickBooks to ensure the payment is made before the deadline.  

Make the most of early payment discounts

Some suppliers offer a discount on the total cost of an invoice if you pay within a certain timeframe. Taking advantage of those discounts when you can will help to improve your profit margins over the longer term.

What are the common invoice payment methods?

When making an invoice payment, it’s worth spending a bit of time considering the advantages and disadvantages of each payment type. The common payment types include:

  • Paying by cheque - This is a cheap but outdated and time-consuming payment method that can take your attention away from day-to-day tasks.

  • Cash - Paying by cash should be avoided unless you’re making the payment in person. Cash payments can be lost or stolen and there’s no method of recourse. 

  • Online credit or debit card payment - This is a fast and secure method of payment, with reputable vendors providing multiple layers of security to keep your personal data safe.

  • Direct Debit - this is a safe and secure way to make recurring payments. You authorise your supplier to collect payment directly from your bank account. The payment amount and payment schedule can be fixed or variable making it pretty flexible. Companies like GoCardless make it easy to collect recurring payments from an invoice using Direct Debit.

  • Bank transfers - Bank transfers are simple, quick and free to send. All you need is a few details from your supplier to complete the transfer.

  • Mobile payments - You can make online payments on the move using secure mobile apps such as PayPal, although you may have to pay a fee.

  • Automatic bill payment - QuickBooks allows you to make recurring payments automatically. They’re fast and secure, but you do have to make sure there’s enough money in your account for the payment to be made.

How long do you have to pay an invoice?

That depends on the supplier and the industry you operate in. Payment terms can range from just seven days in some industries to 90 or even 120 days in others. Currently, the average payment term in the UK stands at 20 days from invoicing. The industries with the longest standard payment terms include construction, manufacturing and professional service providers.

According to the website, if no payment date has been agreed before an invoice is issued, the invoice should be paid within 30 days.

What are invoice payment terms?

Invoice payment terms and conditions should be included on an invoice and explain how the supplier expects to be paid. They typically include the following details:

  • The payment due date

  • The accepted methods and currencies of payment

  • Information about early payment discounts and late payment fees

  • Details about payment plans, such as paying in instalments (if applicable)

Here are some of the terms you might find on a supplier’s invoice:

Invoice payment term


Net 7, Net 21, Net 30, etc.
The payment should be made within seven, 21 or 30 days of an invoice’s issue date
Payment in Advance - The supplier expects payment before the work is done or the goods and services are received
Cash in Advance - The supplier wants to be paid in advance and in cash
Upon receipt
The supplier expects the payment to be made as soon as the invoice is received
Payment is due at the end of the month the invoice was received in
Payment is due at the end of the month following receipt of the invoice

How to process an invoice

Every time you receive an invoice, there are a number of manual steps you must take before the payment can be made. In a larger company, this is done by the accounts payable or payments team. In small companies, this is usually done by the business owner themselves.

The steps are as follows:

  1. Receive the invoice from a supplier

  2. Submit the invoice internally for processing

  3. Enter the invoice data into accounting software

  4. Check and approve the invoice for payment

  5. Include the invoice in a payment run

Processing invoices manually is time-consuming and labour intensive, which is why small businesses usually choose to automate the process using invoicing software. QuickBooks’ invoicing software can be integrated with your current accounting software to reduce the risk of human error, cut processing times and help you save money by avoiding late fees.

Can I refuse to pay an invoice?

If you’re not happy with the goods or services you’ve received from a supplier, you may not want to pay an invoice. However, once an invoice has been sent, the supplier does have the legal right to be paid. 

What you must not do in this situation is simply ignore the invoice, as that will stand against you if the supplier takes legal action. Instead, you should communicate with the supplier and do your best to resolve the situation amicably. 

Having a conversation, ideally face to face (when and if it is safe to do so), to explain why you’re not satisfied with the products or services you’ve received is a good starting point. You may then be able to reach an agreement about what the supplier can do to put it right, or potentially agree on a partial payment. 

If you can’t find a solution you’re both happy with, the supplier is likely to make a legal claim for the payment online. You’ll get the chance to respond to the claim and a hearing may be required in the small claims court. 

Alternatively, if the amount you’re refusing to pay is more than £750, the supplier could choose to issue a statutory demand for the money you owe. If the statutory demand is ignored and the supplier pursues the matter further, it could potentially lead to the forced closure of your business.

What to do if a client refuses to pay an invoice

If the shoe is on the other foot and a client is refusing to pay an invoice that you have issued, you should first try to resolve the issue by communicating with them directly. If they ignore your emails or phone calls, or you cannot reach an acceptable resolution, the paths open to you are as follows:

  • Mediation - An impartial third party will act as the mediator to try and help you to resolve the situation. They’ll likely charge a fee but it will usually be preferable to ending up in court.

  • Legal action - If your client refuses to pay an invoice and mediation doesn’t work, you’ll be left with little choice but to take them to court. You can make your claim online and, although there will be court fees involved, you can proceed without the help of a solicitor to save on legal fees.

  • Statutory demand - You can issue a statutory demand against a client or customer who owes you more than £750. If they ignore the demand, you can escalate things further and potentially have a limited company closed down or a sole trader or member of a partnership made bankrupt.

Sending professional invoices out on time means you get paid faster. Discover how QuickBooks makes all the difference.

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Take invoice payments seriously

If you don’t give supplier invoices the attention they deserve or make payments on time, you could live to regret it - but don’t let that scare you. Automating the process with QuickBooks and making outgoing payments a priority will help you to build positive relationships with your suppliers and become the sort of business people want to work with.

Easy invoicing with QuickBooks We hope you’ve found this article about what an invoice is and how to avoid paying late fees useful. If you want to learn more about invoicing and getting paid on time, visit our small business blog


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