Invoice payment methods for small businesses

For many small businesses owners, especially in the services industry, you need to send invoices.

There’s a variety of payment methods you can choose to accept, depending on what suits you, your business and your clients.

You want to make payments as easy as possible for your clients.

This can be done by picking multiple payment methods or asking the client their preferred payment method.

Whatever payment method(s) you choose, you should have clear instructions on how the client can make the payment.

Keep in mind that each country has slightly different payment systems and payment rates, and individual research should be conducted so that the most appropriate methods can be used.

Consumer payment methods (%)

Based on the findings in the Reserve Bank of Australia’s 2019 Consumer Payments Survey, conducted by Roy Morgan Research

Source: Reserve Bank of Australia

Types of payment methods your business can use:



  • One of the easiest forms of payment
  • No transaction fees
  • No processing time


  • More likely to have your taxes audited by the government
  • Least secure method. Vulnerable to being misplaced or stolen
  • Keeping track and counting cash at the end of each day can be time-consuming
  • Keeping cash stocked with bills can stop you from using that money in other ways for the business

Debit/Credit Card


  • Can be very quick and convenient for customers
  • Customers can safely make large purchases
  • You won’t have to keep as much cash in store
  • Foreigners can easily make payments
  • Accepting debit/credit card payments can boost sales, increase cash flow and improve the overall customer experience


  • Processing time (usually between 1-3 days)
  • Transaction fee for every payment
  • In order to accept payments you will need to set up a merchant gateway or a Point-of-sale (POS) device to accept payments. You can either buy or rent these.

Mobile Payment


  • Convenient payment method, particularly for companies conducting their business on-site such as tradesmen.
  • Relatively fast payment option (a few days to receive).
  • They sometimes work with rewards programs which can give you benefits and save you money.
  • You don’t have to carry cash or a card/wallet, its all on your phone or watch.


  • Transaction fee for every payment.



  • No transaction fee.
  • Can be written up at any time.


  • Long processing time for money to come through.
  • Cheques can ‘bounce’ if the customer does not have sufficient funds, meaning you won’t receive the payment.
  • Inconvenient as the ‘float time’ between when the cheque is written and when it is cashed can vary greatly.
  • Vulnerable to scammers stealing your information, or modifying the amount on the cheque and wiping out your account.

Bank transfer


  • No transaction fees
  • Customers can safely make large purchases.
  • Can be a quick method of making payments.


  • Customers may not feel comfortable transferring directly from their account.
  • Transaction processing time.
  • You may need to set this transaction type up with your bank and your customers.

Automatic transfer


  • Great for payments you either charge for regularly, or need to pay regularly.
  • Avoids late fees.


  • Could overdraw your account which can lead to overdrawn fees.
  • Much easier to miss any billing errors.

Online payments


  • Extremely quick to conduct and for the money to be processed.
  • One-click payment such as Apple pay make it a very easy tool to use. Apple pay is quickly becoming one of the most popular ways to make in-person payments. In the UK in 2018, 62% of all payments were electronic (Let’s be game changers 2019).


  • Vulnerable to technical issues. Poor internet connection can disable online payment methods.
  • Risk of fraud and theft. As more and more people choose this method of payment, criminals are becoming more advanced in the ways they interfere with transactions and steal people’s money and information.

What to consider when choosing your payment methods

There’s no perfect payment method for everyone. All the methods available to small business owners have their positives and their negatives. You’ll need to look at your business and the clients that you deal with. Some things to keep in mind are:

  • Costs – including service and transaction fees. You might also have to pay for hardware if you choose a physical processor or labour costs if you need to hire someone to handle cash.
  • Customer preference – knowing your market and what payment methods your clients prefer will help them pay on time. You want to make paying invoices easy for them so think about their technical skills and if they ask for a particular payment, consider catering to their needs.
  • Reliability – if you want to use payment methods that require an internet connection, but you work in locations with unstable internet, it would be wise to have a back-up method. If you’re far away from a bank, you probably won’t want to choose a method that requires physical banking. Think about your limitations and work within them.
  • Risk – evaluate the risks of each payment method. Do some have a higher chance of experiencing hackers or theft? Which methods have buyer protection and fraud security? Consider both online security and physical security