How to pay an invoice

When you receive an invoice, you have to review it and complete the payment using cash or check, credit or debit card, bank or wire transfer, or online payment services.

This short article will show you the steps to follow in order to speed up the process of settling invoices.

Let’s dive in!

1. Review the pricing and payment structure

Once a contractor forwards you an invoice, you need to go through it carefully.

Things to review include the invoice number, payment method, due date, unit pricing, total pricing (including VAT, if applicable), and other details.

Reviewing invoices will help you understand if you are being overcharged for products or services.

You should also ensure the doc contains all the details needed for proper documentation. 

Another reason to review every invoice properly is to avoid being scammed.

Sometimes scammers can spoof emails and send you an invoice that looks legit.

If you don’t review the name and company credentials properly, you could end up sending a payment to the wrong account.

2. Choose the payment option that works for you

Most contractors send invoices with specific instructions containing invoice payment methods and card details.

The invoice could also contain bank account details for those who wish to pay through ACH (bank transfer) or wire transfer.

Another viable way to pay is through the use of a credit card or direct debit card.

Credit card payments are usually faster for local transfers because the money goes directly to the user’s account. 

To process the payment, enter the recipient’s details and specify the total amount plus commission and VAT (if needed). 

For real-time payment processing, some contractors might make provisions for online payment services such as PayPal and Stripe.

These services are also embeddable in the invoice as gateways in order to guarantee faster payment in a few clicks.

To choose the right payment method, verify the business owner’s or representative accountant’s details.

You should also bear in mind that the transaction fees differ depending on your chosen payment method.

So if you have multiple payment options, choose the one with the least commission.

3. Pay before the stipulated date

Early invoice payment protects you from late payment fees, public embarrassment, and even the potential for lawsuits if you’re delinquent.

As we mentioned above, every invoice contains payment terms that specify the due date.

Once the date elapses, fees for being late will start accruing.

Therefore, you need to start planning how to settle the invoice in advance.

If you own a small business, for example, you can pay off the invoice on your own without jumping through bureaucratic hoops. 

In companies with slow bureaucracies, you should start poking the accountant to complete the payment before the due date. 

If, for any reason, you won’t be able to process the payment promptly, notify the contractor or vendor in advance.

This transparency will protect your business from reputational damage, fines for being late, and even possible legal headaches.

4. Establish a schedule for recurring payments

If you have a running contract with a service provider, you should structure invoice payments to recur periodically — say, the 15th of every month.

Since you know the pricing, you can automate the process using invoicing software to ensure your business’s outward cash flow is smooth and transparent.

In any case, always review recurring invoices to ensure you are paying according to the running contract.

You can configure your bank account or online payment solution to make recurring payments to authorized accounts.

This way, you’ll have all bill payments on autopilot. 

5. Confirm receipt of payment

After paying the amount due of an invoice, you should always send the receipt of payment to the contractor or freelancer.

This confirms the payment has been made and establishes a digital paper trail in case of any future disputes. 

You should also send a follow-up email or text to confirm that the person has actually received the payment. Why?

Because ACH transfers and credit card payments often get stuck without warning from the bank — especially when routing international bank transfers.

So, you need to make sure the money has cleared. 

You can manually send payment notifications, screenshots, QR codes, or PDF files showing the payment details.

Alternatively, you can automate this process using accounting software.

6. Save payment records

Apart from sending confirmation texts to the contractor, you must also save copies of the payment receipt on your local drive or in the cloud. This is evidence that you’ve settled your bills with the service provider.

Besides, tax authorities and auditors might request your invoices and receipts, so you need a proper document trail to show your expenses are all accounted for and your books are all in order.

Pay invoices instantly without hassle

Paying invoices promptly will save you from contract disputes and help you establish a clear digital paper trail for payments. 

With the right document management solution, you can double-check invoices to ensure every unit price and subtotal is in order.

If not, notify the sender to fix all errors and re-calculate the total.

Small business owners and independent contractors can also use PandaDoc’s templates to write invoices for settling all accounts payable and upcoming bills. 

The platform also has online payment portals that allow users to pay instantly using integrations like Stripe, PayPal, and other options. You can use the payment gateway to pay your bills and automate recurring payments.

For bank transfers and credit card payments, you can also use PandaDoc to pay as well as notify the user when the payment goes through.

This establishes a digital paper trail for auditors and stakeholders.

Finally, you can use the legally binding e-signature tool to sign the invoice online.

Once the payment is complete, you can save receipt copies in the secure document repository for easy access.