Invoice Payment Methods Compared

The wrong invoice payment method can leave a well-written and clear invoice unpaid. Maybe the client doesn’t know how to use the method you listed on your invoice, or they asked to pay by cheque, and you’re unsure what to do.

There is no single best option as to which payment method to use. It all depends on who’s paying, how they usually pay, and where they are located. In this article, we will be comparing the full range, old and new, so you can know what to offer and how to handle unfamiliar requests.

Which Payment Methods Can You Put on an Invoice? 

There are nine methods worth knowing, plus one relic. Here they are, with a plain-English line on each. 

Traditional Methods

• Bank transfer (EFT): EFT means electronic funds transfer. The client sends money from their bank account to yours using your account details.
• Cheque: A written order telling the payer’s bank to pay you from the payer’s own account.
• Bank draft: Like a cheque, but the bank takes the money from the payer first and then issues the draft. It’s also called a banker’s draft, or a cashier’s cheque in the US.
• Direct deposit: Money sent electronically into your account, often on repeat, like a monthly retainer. It’s much like a bank transfer. In the US, it runs on the ACH network, and in the UK it’s called a Bacs direct credit.
• Cash: Notes handed over in person.

Digital and Card Methods

• Debit card: Pays straight from the client’s bank account.
• Credit card: Borrows from the card provider’s credit line, and the client repays later.
• Mobile banking or mobile money: Payment through a banking app or a phone wallet such as MTN MoMo.
• Payment link: A link on your invoice that opens a secure page where the client picks how to pay.

Comparison Table: Speed, Cost, Risk, and Where Each Is Used 

Card and link fees are standard published rates from Paystack (Nigeria, Ghana) and Stripe (UK, US).

One term you must keep in mind is cleared funds. This is money that has landed in your account, and it is yours to keep. Treat an invoice as paid only when you have cleared funds, not when the payment is promised or is pending.

Putting your bank details on an invoice comes with some risks. Our article on payment links vs. sending your bank details covers it.

Traditional Instruments: Cheque, Bank Draft, and Direct Deposit 

Digital-first guides skip these, but a lot of larger companies, government bodies, and long-standing B2B clients still use them.

Cheque. A cheque draws on the payer’s own account, so it can bounce back if the money isn’t there. In the UK, a cheque you pay in is usually available by the end of the next working day. Until then, don’t count on it.

Bank draft. The bank will issue and guarantee a bank draft after taking the money from the payer’s account. That means it can’t bounce. Banks usually charge a fee, and it takes longer to arrange. Once the payer hands it over, it can’t be cancelled. 

Always consider the possibility that a draft can be fake. Before you release any work or refund an overpayment, let your bank confirm the draft is genuine.

Direct deposit. This is money sent electronically straight into your account. It’s the go-to for repeat clients and retainers. The catch is that your client needs your account details in advance, so send them safely.

Traveller’s cheques. They exist, but American Express stopped selling them at the end of 2020, and few businesses take them. Leave them off your invoice. It will be the less likely method clients insist on using.

The Best Method for Nigerian Small Businesses 

This advice is directed at Nigerian freelancers and small business owners not for everyone. Always offer two payment methods and let your client choose which one is most convenient for them. An example could be bank transfer and a payment link, which are the most common here.

Bank transfer costs you absolutely nothing to receive payments. The sender, however, pays the bank fee, which would typically range from ₦10 to ₦50, plus a ₦50 stamp duty on transfers that exceed ₦10,000. The Central Bank of Nigeria has proposed new fee bands, so check your bank’s current rates.

A payment link works best for clients who want to pay by card or USSD without typing account numbers. Paystack charges 1.5% + ₦100 on local cards. It waives the ₦100 on payments of ₦2,500 or less and caps the total fee at ₦2,000. On a ₦200,000 invoice, you pay ₦2,000, not ₦3,100. In Ghana, Paystack’s mobile money rate is 1.95%. With Billing, you can easily add your preferred payment link to any invoice you create.

With larger or government clients, a cheque or bank draft may still come up. Ask for a bank draft or manager’s cheque instead of a personal cheque, since the bank stands behind it. Whatever you accept, confirm the current fees with your provider.

How to Show Payment Terms on an Invoice 

Payment terms belong near the total and the due date, where the client’s eye goes when deciding to pay. Three simple phrasings cover most cases:

• Due on Receipt: payment is expected as soon as the client gets the invoice.
• Net 14: payment is due 14 days after the invoice date.
• Net 30: payment is due 30 days after the invoice date.

Then say which methods you accept, so the client isn’t left guessing. For example: “Pay by bank transfer, card, or mobile money via the link below. We don’t accept cash.” It’s one line, and it prevents a lot of back-and-forth and removes the possibility of delays.

Frequently Asked Questions

1. What’s the safest payment method to put on an invoice?

A payment that has landed in your account as cleared funds is the safest, whether by bank transfer or a payment link. A verified bank draft comes next. Personal cheques are the riskiest, since they can bounce back and card payments can be disputed.

2. What’s the difference between a cheque and a bank draft?

A cheque is written by the payer and drawn on their own account, so it can bounce back. A bank draft is issued by the bank, which takes the money first, so it can’t bounce back. It costs a fee and can’t be cancelled once handed over.

3. Is it safe to put bank details directly on an invoice?

It’s common practice, but there’s a risk that someone intercepts the invoice and swaps in their own details. Send invoices through secure channels. If a client sees your details change, they should confirm by phone. A payment link avoids the issue.

4. What payment method gets invoices paid fastest?

Mobile money, instant bank transfers, and payment links usually land in seconds. Cheques and bank drafts are the slowest, since they need days to arrange and clear.

Final Thoughts

The right invoice payment method is no particular one at all. It is more about what is easiest for your client to use and the safest for you to receive payments. Sometimes it may be a payment link, or it could be a bank draft. But with this article, you should be able to navigate it without being caught off guard.