You’ve completed a project and it’s time to issue your customer an invoice, but what payment methods should you include? Well, it’s up to you really, but if you’re brand-new to all this then it can be useful to get a few pointers!
There’s no hard-and-fast rule to how you get paid, but it is important to provide the customer with all of the necessary information they need to make smooth, hassle-free payments. If you don’t, you may well find yourself facing headaches like late payments, complicated bookkeeping, and fractious client relationships.
What is the best way to take payments for my business?
There’s no right or wrong way to take payment for the work you’ve done. It really all comes down to what works best for you and sometimes, if you’re willing to be flexible, how your customer would prefer to pay.
The great news? You have a whole host of options at your fingertips, and these can vary from one customer to another. That said, maintaining as much consistency as possible can help to make your bookkeeping and accounting more streamlined and stress-free.
This is becoming less and less commonplace as FinTech (financial technology) continues to advance. However, payments by cash are still an option you can list on your invoices if you’d like to.
You’ll need to include clear instructions on where and how cash payments can be made, whether that’s in person or by depositing cash into your bank account. Don’t forget to include your cash takings in your bookkeeping to make sure your tax records are accurate.
As a physical form of payment cash is the least protected, and the most susceptible to theft.
Like cash, cheques are fast becoming a thing of the past, but for now you may find some customers still like to see it as a payment option on your invoices. The benefit of cheques is that they’re more secure than cash, and negate the digital transaction fees that often come with online payment methods.
Cheques do come with more admin requirements though, so consider this before adding it to the list of possible payment methods on your invoices.
Bank transfers (also referred to as BACS payments) are often the most popular method of payment which people list on their invoices. This is because they’re quick, easy, and pretty low risk. The money can simply be moved from the customer’s bank account into yours, and often without any fees to worry about on either end.
Unfortunately, bank transfers mean you’re having to rely on the customer to make the payment manually, which isn’t always as hiccup-free as it should be.
PayPal is a secure payment gateway that you’ll most likely already be familiar with. It’s quick, easy, relatively low-risk and recognised worldwide, which has made PayPal a popular payment option on invoices. Plus, all you need to share with the customer is the email address attached to your PayPal account.
It is worth noting that you are required to pay a small fee on every payment deposited into your PayPal account, although it is free to transfer money from your PayPal account into your chosen bank account.
Credit or debit card
If you’d like to give your customer the option of paying by credit or with debit card, make sure to include the types of cards accepted and clear instructions for submitting payment information.
Like BACS payments, this is a manual process, which means you’re having to rely heavily on the customer to pay on time. That’s why it’s so important to have a solid process in place to help you manage late payments and factor them into your budgeting — even though you shouldn’t have to.
If you have clients or customers that you work with on a regular basis, getting them to set up a direct debit might be a good idea. This allows you to take money from their account whenever a payment is due, and you can amend this payment amount as and when required.
You don’t have to seek permission from the customer when amending a direct debit amount. That said, it is best practice (and good manners) to inform them of the change ahead of the scheduled payment date.
Digital wallets such as Apple Pay and Google Pay are becoming increasingly popular. They’re secure, easy to use and convenient for both you and your customers.
There are still some limitations to this kind of payment method and most come with transaction fees. This is why we recommend offering this as a supplementary payment option on your invoices, rather than making it your primary choice on the list.
The benefits of giving people multiple payment options
There’s no saying you must include only one payment method on your invoices if you don’t want to. In fact, there are many advantages to giving your customers choice, including:
- Reputation: When clients and customers associate your business with leading payment providers like Apple, Google and PayPal, it signals that you are trustworthy. It also gives your brand more gravitas.
- Slicker, quicker payments: Once your work has been done and the invoice has been issued, you just want to get paid as quickly and painlessly as possible. Offering multiple ways to pay facilitates an easy process for the customer, which will hopefully lessen the amount of time you have to spend chasing late payments.
- Keeping your customers happy: Providing your clients with choice is a great way to keep them sweet. This positive customer experience then translates into other benefits for you and your business, like good reviews and word-of-mouth recommendations.
What other information do I need to include on an invoice?
When you use good bookkeeping or invoicing software then you’ll only really need to fill in the blank spaces on your template or entry form, and let the software do the rest.
If you prefer to create your own invoice and do it manually, the checklist below will help you to cross-reference everything to make sure you’ve got it covered.
- A header demonstrating that the document is an invoice
- Date the invoice is being issued
- Invoice number (this needs to be unique from any other invoice)
- Full company name (or your name)
- Legal registered address
- Contact details
- The recipient’s company name
- The recipient’s address
- Purchase order (PO) number (where applicable)
- Description of the work
- Cost breakdown and total due
- Payment method(s)
- Your bank/payment details
- Payment terms (30 days, 60 days, 90 days, etc.)
Find more tips and advice for your business on our website, or check out our guide to hiring the right accountant.