How to Pay an Invoice for Small Businesses
Best Ways to Pay an Invoice as the Business Owner
For small businesses, paying invoices in due time is good and helps to establish a continuous approach to accounts payable. To pay an invoice in due time, a proper system for accounts payable is needed. This also helps you pay only the accurate ones.
To keep the relationship between small businesses and vendors waxing stronger, and also to avoid paying extra charges, It is important that small businesses pay up invoices on time.
In this section, you’ll put through how to pay your invoice as the business owner
Here is a list of things you’ll learn:
- Paying an Invoice
- What is Accounts Payable
- Organizing Accounts Payable
For small businesses, paying an invoice can be ensured by adhering to the steps mentioned below:
Run a Check on Goods and Services
You should always check all the invoices coming into your company and ensure they are correct, and the goods and services you are paying for are exactly what you have received in the right quantity. To check properly if the invoice is correct:
- Compare what you ordered from your company
- Check the goods received and make sure it tallies with what you ordered
- Check the cost you’re paying and confirm if it is the initial agreement between you and the supplier
Take note of the payment due date
A good invoice should always indicate the date when payment is due. If there’s an extra charge after payment is due, the invoice should also show that. You can save the date when payment is due on your online reminder or digital calendar.
Select your preferred payment method
When you receive a good invoice, it should come with all the payment methods the vendor accepts, maybe PayPal, check, cash, or card transaction. Choose a preferred payment method that is convenient for your business, so that you can easily make payment when you’re ready.
Include the invoice in your payment schedule
Tracking all due dates for your invoices is key to properly manage your business expenses. On a spreadsheet or online accounting software, add a schedule for all upcoming payments.
Online accounting software will keep you notified as the date draws near. Your payments may be scheduled on a weekly or monthly basis. It depends on how many invoices you have to pay.
Keep records of payment confirmation
After paying an invoice for your business, ensure that every proof of payment or confirmation of payment is kept. A payment proof may be a number assigned to you after making an online payment or some other stuff. It is important to have payment records because your vendor may get confused about whether you have paid or not.
Depending on how you run operations for your business, you may be sent different forms of invoices at a time. This section of the article will help you get familiar with different invoices.
What are Accounts Payable?
Accounts payable is the sum of all payments required to be made by a company, with the exception of payroll. Accounts payable process makes sure a company fulfills all payments in due time and makes sure that only correct invoices are paid.
Organizing Accounts Payable
For small businesses to step up the account payable process, it is crucial to organize payments. With these steps, your company can get it right in simplifying and improving accounts payable methods:
Establish a Consistent System
In every company system, consistency is needed to organize payments effectively. To establish a consistent system, you should create a standard method of paying your invoice, right from the moment you get an invoice to the date you make the payment.
You should file all your invoices in a way that it doesn’t take you time to look for one. Filing invoices can be done through a digital means or physically.
The invoices can be filed by payment date or date issued. You can easily note which invoice is due for payment and the one to be delayed.
Set Timely Reminders
It is good to set reminders always, so you don’t miss out on a payment. Reminders should be set for every invoice your company receives after filing. You can set reminders with a digital calendar or with alerts when the date is almost due. With this, you won’t skip a payment or pay a fine for overdue payments. It also helps you be at peace when you don’t have unexpected payments coming.
Keep Every Detail of Your Vendor Information
When you have to make payments, and you’re confused with the billing structure, or when you want new orders, you can easily reach your vendor when you store their contact details. You can keep all your suppliers’ information in a centralized location online or offline.
To make sure you’re current on the vendor’s information, check the details again when you receive a new invoice from them and note the change in their contact details on your record.
When you make a purchase from some vendors, they may indicate some dates when you pay and receive a certain discount. This means that making early payments gives you a discount. If this is common to your vendors, make sure to plan before receiving the invoice so you can pay a discount price.
For vendors who practice seasonal sales, you should take note of that as well and stock your goods when the price is less.
Have A Detailed Budget
To organize your accounts payable properly, you need a budget for your business. With a detailed business budget, you’ll know how much you have to pay each month and how much money you’ll have left. To have a detailed budget, compare your past invoices and how much you spend each month on invoices and other expenses.
Build A Cash Reserve
Small business owners know how hard it is to run a business when the business cash flow is interrupted. You should learn the habit of always saving so you can have a backup when you are short on cash for running the business.
To cultivate a savings habit, you can open a business savings account where you can save cash at all times, and replace any money borrowed from the account without procrastinating.
For records purposes, it is easy to change or lose paper invoices. Going paperless is a good idea for you as a business owner and your vendor. If you are aware that your vendor uses an online invoicing software, always request digital invoices. With online invoicing, you as the business can receive an invoice through email and document them in your cloud storage.