# How do you send an invoice that gets paid faster? An invoice is paid faster when it reaches accounts payable on delivery day with the purchase order number, a dated due date and a one-step way to pay. --- You send an invoice that gets paid faster by removing the days your customer's own process adds to it: send it on the day of delivery, to the address that accounts payable actually reads, with the purchase order number that lets it match without a question, a due date written as a calendar date, and a payment route that takes one step. Almost every day an invoice waits is spent inside the customer's organisation, in a queue that nobody there is trying to make slow, and each queue has a cause the sender can act on. This article is written for a business that invoices other businesses on credit terms. It gives the measure first, days sales outstanding, then the four places where the days go inside the customer and what the sender changes for each, and ends with the same receivables before and after, with the financing cost computed. The statutory rules it mentions belong to the jurisdictions named beside them and are general information, not legal or tax advice.

$1,800a year is what each day of waiting costs a business with $7.3 million of credit sales at a 9% cost of capital

25 daysremoved between delivery and cash in the worked example, from 67 days to 42

$500,000of cash released by those 25 days, at $20,000 of credit sales per day

Worked example with illustrative figures, detailed in the last sections of the article.

## How do you measure whether invoices are being paid faster? Whether invoices are being paid faster is measured by days sales outstanding, or DSO: the receivables balance divided by credit sales for a period, multiplied by the number of days in that period. The result is the average number of days between issuing an invoice and receiving the cash, and it comes straight from two figures in the ledger. Take a business with $7,300,000 of credit sales over a 365-day year and $1,160,000 of trade receivables on its balance sheet. Its DSO is 1,160,000 divided by 7,300,000, times 365, which gives 58 days. Read the other way round, the business sells $20,000 on credit each day and is waiting for 58 days' worth of it. Use credit sales, not total sales, since sales collected at the point of sale would flatter the result, and expect the figure to swing when sales are seasonal. Watch DSO next to a second measure, average days late, the number of days between each invoice's due date and its payment date: DSO tells you how long the money is out, days late how much of that is the customer missing the terms. DSO has a blind spot. The clock starts when the invoice is entered in the ledger, not when the goods or services were delivered. Work delivered and not yet invoiced is not in receivables at all, so a business that invoices in batches can report a respectable DSO while financing extra days of deliveries. The honest measure of the whole wait is days from delivery to cash: unbilled days plus DSO. ## What does each day of waiting cost? Each day of waiting costs one day of credit sales multiplied by your annual cost of capital, every year the delay persists. For the business above, one day is $20,000 of cash that has to be found somewhere else, and at a 9% cost of capital that day costs $1,800 a year. The 9% is an illustrative rate, stated so the arithmetic can be followed. Use your own: the rate on the credit line that funds your receivables, or the return you could earn on the cash. A DSO of 58 days means $1,160,000 tied up, and carrying that balance at 9% costs $104,400 a year. Interest is the part of the cost that is easy to compute. Slow receivables also set the size of the credit line you need and the hours your team spends chasing; the article on what a late payment actually costs covers those effects. ## Where are the days lost inside the customer? The days are lost in four places inside the customer: receipt of the invoice, matching it to the order and the delivery, approval by the person who can release the spend, and the wait for the next payment run. An invoice passes through all four in order, and a problem at any one sends it to an exception queue where it waits for a person. Most mid-sized and large buyers work on a three-way match. Accounts payable compares the invoice with the purchase order (what was ordered, at what price) and with the goods receipt or service confirmation (what actually arrived). If all three agree within a tolerance, the invoice can be approved; if not, somebody has to find out why. | Stage at the customer | What happens there | Why invoices stall | What the sender can do | | --- | --- | --- | --- | | Receipt | The invoice reaches accounts payable and is entered in their system | Sent to the buyer's own mailbox, a former employee, or the wrong legal entity | Use the address or portal named at supplier setup; one invoice per file | | Matching | Invoice compared with purchase order and goods receipt | No purchase order number, different quantities, prices or units, receipt not yet booked | Quote the order number and line numbers; invoice what was received | | Approval | A budget holder confirms the charge | Approver absent, amount over their limit, work not recognised | Name the requester; get delivery signed off before invoicing | | Payment run | Approved invoices are paid in batches on fixed dates | Approved just after the cut-off; held until the due date | Know the run dates; state the due date as a date | ## Who should receive the invoice, and what must it carry to pass matching? The invoice should go to the accounts payable address or portal the customer designated, not to your commercial contact, and it must carry the customer's purchase order number exactly as issued. Your contact at the customer placed the order, but in most organisations that person cannot enter or pay an invoice, and an invoice emailed to them waits to be forwarded. Send it where the customer's process starts, and copy the contact. The purchase order number is the key the matching step searches on. Write it in the field or position the customer asked for, with the line numbers if the order has several lines, and keep the description, the quantity, the unit and the unit price identical to the order. If you delivered less than was ordered, invoice what was delivered: a partial delivery invoiced in full fails the match against the goods receipt and waits until the balance arrives. If the price changed after the order was raised, ask for the order to be amended before you invoice. What the document itself must contain to be legally complete, from numbering to tax lines, is covered in the article on best practices for a freelance invoice, and the same content rules apply to a company. This article deals with how a complete invoice travels. ## Why should you be set up as a supplier before the first invoice? You should be set up as a supplier before the first invoice because a buyer's system cannot pay a party that does not exist in its supplier file, and creating that record commonly takes longer than the payment terms. Supplier onboarding is a control, and a reasonable one. The customer records your legal name and registration, your tax identification, your address, and your bank details, and many buyers verify the bank details independently before the first payment, precisely because changed bank details are a known fraud route. Some also ask for tax forms or insurance certificates, and each item has an owner and a queue. Make sure the legal entity on your invoice is the one that was onboarded and the one named on the purchase order. An invoice addressed to the parent or a sister company has to be cancelled and reissued. When your bank details must change, use the channel their process requires and expect them to verify the change before paying. ## When should the invoice be sent? The invoice should be sent on the day the goods are delivered or the service is accepted, not at the end of the month. Every day between delivery and invoice is a day of credit the customer did not ask for and your DSO does not show. A business that invoices twice a month leaves the average delivery waiting half of a 15-day cycle, 7.5 days, before the batch is started, and a day or two more while it is prepared. On $20,000 of deliveries a day, nine unbilled days are $180,000 that is not yet a receivable, cannot be chased and, where receivables are used as security for borrowing, cannot be borrowed against. Invoicing on delivery needs the information to exist on delivery. The delivery note or the acceptance of the work is captured the same day, and prices are agreed before the work starts. For long projects, agree milestones or monthly progress billing in the contract so there is always a defined event to invoice against. ## How should payment terms and the due date be written? Payment terms should be agreed in the contract or order before the work starts, and the invoice should then state the due date as a calendar date. "Net 30" leaves the reader to decide what the 30 days run from; a date does not. Terms written as a number of days invite three different readings: from the invoice date, from the date the customer received the invoice, or from the end of the month in which it arrived. The customer's system will apply whichever its supplier record says. Write "Payment due 14 March", and check before delivery that the terms on the customer's purchase order match your own. The terms themselves are a commercial decision, bounded in some jurisdictions by law. In the European Union, according to the European Commission's presentation of Directive 2011/7/EU on combating late payment, businesses have to pay their invoices within 60 days unless they expressly agree otherwise and provided the longer period is not grossly unfair, and public authorities within 30 days or, in very exceptional circumstances, 60. In the United Kingdom, government guidance states that where no payment date was agreed, a commercial payment is late 30 days after the customer receives the invoice or after delivery, whichever is later. Other countries set their own rules or none, so read your own. ## Do fewer payment steps and several ways to pay make a difference? Fewer payment steps and more than one way to pay shorten the last stretch, from the customer's decision to pay to cleared money in your account. Put the payment details on the invoice itself, complete: account name exactly as the bank holds it, account identifiers for domestic and international transfers, and the reference you want quoted. Ask the payer to quote the invoice number, because a payment without a usable reference sits unapplied in your own ledger, inflates DSO and triggers a reminder to a customer who has paid. Offer the methods your customers' payables teams actually use. A buyer with a purchasing card programme may pay small invoices the same week if you accept cards. The article comparing B2B payment methods sets out the cost, speed and reversibility of each method. The article on how to get paid the same day you invoice covers the case where payment is made at the moment of invoicing rather than on terms; this article stays with credit terms. One situation adds steps on the sender's side: an invoice whose proceeds belong to several parties, such as a lead contractor, a subcontractor and a referrer who each take an agreed share. The usual sequence is one payment to the lead party followed by onward payments, each with its own delay. Shaka is a payment router built for that case: each party's share is set as a percentage of the deal and can be signed by each recipient before the client pays, the client pays once through a payment link, and every party is paid at the same moment, in one transaction. Shaka routes the payment and never holds the funds, the payment is onchain and final, and a deal has at most 20 recipients. It is not an invoicing or accounts receivable tool and does nothing for a customer's approval process. ## Does electronic invoicing get you paid faster? Electronic invoicing shortens the receipt and matching stages, because a structured invoice arrives in the customer's system as data and does not have to be opened, read and keyed. It does not shorten approval or the customer's payment terms. A structured electronic invoice is a file in an agreed data format, exchanged between systems. A document attached to an email still has to have its figures extracted. A customer's supplier portal or invoice network removes the days of receipt and most keying errors, and usually shows a status: received, matched, approved, scheduled. In a growing number of countries structured e-invoicing is an obligation, not a choice. According to the European Commission's country information on e-invoicing, all VAT-registered businesses in Italy have been required since 1 January 2019 to issue and transmit electronic invoices in the FatturaPA format through the Sistema di Interscambio, the exchange platform managed by the Italian revenue agency. At European Union level, the Commission states that the VAT in the Digital Age package was adopted on 11 March 2025, that member states have been able to introduce mandatory e-invoicing under specific conditions since it entered into force on 14 April 2025, and that digital reporting requirements will apply to cross-border business-to-business transactions from 1 July 2030. The rules differ by country in scope, format and start date. Before invoicing a customer in another country, check its tax authority's own page for whether a mandate applies to your transaction; an invoice issued outside a mandatory channel may not be accepted as an invoice there. ## Do early-payment discounts and late-payment interest work? Early-payment discounts and late-payment interest both work on the last stage only, the customer's choice of payment date, and they work on different customers. A discount is a price you pay for speed. Terms such as 2% for payment within 10 days on a 30-day invoice buy you 20 days at a cost far above most borrowing rates, and the article on what a 2/10 net 30 discount really costs works through that calculation from both sides. Offer one only when the days it buys are worth more to you than the discount, and only to customers whose process can pay inside the window. Interest for late payment exists by law in some jurisdictions without any contract clause. In the European Union, the European Commission describes the Late Payment Directive as giving creditors an automatic entitlement to interest at a rate of at least 8% above the European Central Bank's reference rate, plus a minimum of €40 as compensation for recovery costs. In the United Kingdom, government guidance sets statutory interest on business-to-business debts at 8% plus the Bank of England base rate, and adds that statutory interest cannot be claimed if the contract provides a different rate. Where no statute provides it, the right to interest depends on the contract, so the clause has to be in the agreement the customer accepted, not introduced on the invoice. As an illustration, take a €50,000 invoice paid 30 days late and an assumed statutory rate of 10% a year; the true rate moves with the reference rate. Interest is 50,000 times 10% times 30 divided by 365, or €410.96, and with the €40 fixed sum the claim comes to €450.96. The amount is small beside the invoice; its effect comes from being stated on the invoice and applied consistently. What to do when a client pays late or not at all, including escalation and formal recovery, is the subject of its own article. ## What reminder schedule works for business customers? A reminder schedule works when it starts before the due date, is the same for every customer, and escalates to a different person at each step. Its first job is to find out that an invoice is stuck while there is still time to fix the cause before the due date. The schedule below is an illustration to adapt to your terms.

A reminder schedule for a 30-day invoiceIllustrative timing

Five days after sending: confirm receiptAsk accounts payable whether the invoice has been received and matched, quoting the invoice and purchase order numbers. This step finds missing order numbers, wrong entities and unbooked goods receipts while 25 days remain.
Seven days before the due date: confirm the payment dateAsk whether the invoice is approved and which payment run it is in. If it is not approved, ask who the approver is and contact them the same day.
One day after the due date: first overdue noticeA short, factual message to accounts payable with the invoice number, amount and due date, asking for the payment date.
Seven days overdue: phone call and second noticeCall accounts payable, confirm the call in writing and copy your commercial contact. State any late-payment interest that applies under the contract or by law.
Fourteen days overdue: escalate on both sidesYour finance lead writes to theirs. Review whether further orders ship on credit.
Thirty days overdue: formal noticeA formal letter setting a final date, the interest accrued and the next step your credit policy provides for.

Keep every message free of blame and full of identifiers: the person reading it wants a number to search for. Record each answer against the invoice, so recurring causes become visible: the same customer, the same missing field, the same approver. ## How should a disputed invoice be handled? A disputed invoice should be split: agree in writing which part is not disputed, ask for that part to be paid on the original due date, and resolve the rest on a separate track with its own owner and deadline. A customer that queries one line usually holds the whole invoice. Take an invoice for $48,000 on which the customer disputes one line of $3,500, a delivery charge it says was not agreed. The undisputed part is $44,500, about 93% of the total. The clean way to release the larger sum is the one the customer's system can process: issue a credit note against the disputed line, or cancel and reissue the invoice for $44,500 with the original due date kept, and invoice the $3,500 separately once the question is settled either way. Log each dispute with its cause, the amount, the person on your side who can decide, and a target date. Most are differences in price, quantity or paperwork that a credit note or a proof of delivery ends once someone owns them, and counting them by cause each month shows which upstream step to fix. ## What do the same receivables look like before and after? The same deliveries to the same customers on the same 30-day terms go from 67 days between delivery and cash to 42 in this worked example, and the financing cost falls from $120,600 to $75,600 a year. The figures are illustrative and use the business described earlier: $7,300,000 of annual credit sales, $20,000 a day, and a 9% cost of capital. Before the changes, the business invoices twice a month, emails invoices to its commercial contacts, quotes order numbers inconsistently and chases after the due date. After, it invoices the day after delivery through each customer's designated channel, with order and line numbers, a dated due date, complete payment details and the reminder schedule above. The chart sets out where the days sit in each case.

Days at each stage, before and afterAverage days per invoice, illustrative worked example on 30-day terms

BeforeAfter

Stages add up to 67 days before and 42 after. The first stage is unbilled time and sits outside DSO; the other five add up to DSO.

One bar grows, and it explains the limit of everything in this article. Before, the average invoice was approved on day 33, already past its due date, and then waited 18 days for a payment run. After, it is approved on day 11 and the customer, quite properly, holds it until it falls due on day 30 and pays it in the next run. Clean invoicing brings payment back to the terms; only the terms themselves, or an incentive, bring it inside them. ## What is the financing cost before and after? The financing cost of the receivables in the worked example falls by $45,000 a year, from $120,600 to $75,600, and $500,000 of cash is released once. The table gives each line, computed from $20,000 of credit sales a day and a 9% cost of capital. | Measure | Before | After | Change | | --- | --- | --- | --- | | Unbilled days (delivery to invoice) | 9 | 1 | −8 | | Days sales outstanding | 58 | 41 | −17 | | Days from delivery to cash | 67 | 42 | −25 | | Delivered, not yet invoiced | $180,000 | $20,000 | −$160,000 | | Trade receivables | $1,160,000 | $820,000 | −$340,000 | | **Cash tied up in total** | **$1,340,000** | **$840,000** | **−$500,000** | | **Financing cost per year at 9%** | **$120,600** | **$75,600** | **−$45,000** | Two readings of the table are worth separating. DSO, the figure a lender or an investor will look at, improves by 17 days, which accounts for $340,000 of the cash and $30,600 of the yearly saving. The other 8 days, worth $160,000 and $14,400 a year, never appeared in DSO at all: they come from invoicing on delivery. The remaining 42 days are mostly the 30-day term and the customer's run after it. Reducing them further is a negotiation rather than a process fix: shorter terms for new contracts, a discount for the customers able to use one, or payment at the moment of invoicing where that is commercially possible. Measure again after each change, with unbilled days, DSO and average days late side by side.