How Do Invoice Payments Work?

Invoice payments are payments a customer makes against a bill you have issued, rather than at a checkout. The invoice states what is owed, by when, and how the customer can pay.

In South Africa, invoices are most commonly settled by EFT, but businesses increasingly add payment links, card payments and debit orders to get paid faster and reduce manual reconciliation.

How does the invoice payment cycle work?

A typical invoice payment cycle looks like this:

1. You issue an invoice with an amount, due date and payment reference.
2. The customer pays using one of the payment methods offered on the invoice.
3. The payment is received and matched to the invoice using the reference.
4. The invoice is marked as paid and the customer receives confirmation.
5. Unpaid invoices are followed up before or after the due date.

The weakest points in this cycle are usually steps 2 and 3: customers delay paying because it takes effort, and payments arrive without a usable reference.

Which payment methods work for invoices?

A payment link on the invoice is one of the simplest upgrades: the customer pays in a few taps, the amount is fixed, and the payment is automatically tied to the invoice it belongs to.

For customers you invoice every month, a debit order mandate lets you collect the invoiced amount on the due date instead of waiting for the customer to act. See what is a debit order for how mandates and collections work.

How are payments matched to invoices?

Matching, or reconciliation, is the process of linking money received to the invoice it settles. It works best when:

• Every invoice carries a unique payment reference.
• The reference is short and easy to type correctly.
• Online methods, such as payment links and debit orders, carry the reference automatically.
• Incoming payments are checked against open invoices as they arrive.

Manual EFT is the hardest to reconcile because customers type their own reference, or none at all. Payments collected through a platform such as Kwik arrive with the invoice reference attached, so they can be matched automatically. For the mechanics of settlement and matching, see clearing, settlement and reconciliation.

What happens when an invoice is not paid?

Unpaid invoices need a follow-up process:

• Send a reminder shortly before the due date and again after it.
• Make it easy to pay from the reminder itself, for example by repeating the payment link.
• For debit order customers, a failed collection can be resubmitted or tracked in line with the mandate. See unpaids, returns and resubmissions.
• Escalate consistently overdue accounts to a defined collections process.

Invoice payments vs subscription billing

Invoicing suits work that varies from month to month, or once-off sales. If you bill the same customers a predictable amount on a schedule, subscription billing automates the whole cycle, including collection and failed payment handling. See how subscription payments work.

Related topics

• Billing and recurring payments hub
• How do payment links work?
• What is a debit order?
• Payment statuses and references