How to pay an invoice: a step by step guide for business owners

To pay an invoice, check it matches what you ordered, confirm the supplier's bank details are genuine, then send the amount due by bank transfer, card or Direct Debit before the due date, using the invoice number as your payment reference. A standard UK bank transfer usually reaches the supplier within seconds. Paying invoices sounds simple, but a wrong reference, a missed due date or a fake set of bank details can cost you money and damage supplier relationships. This guide covers the details you need, how to pay an invoice step by step, which payment method to choose, how long you have to pay, how to spot invoice fraud and what to do if you can't pay on time.

What details do you need to pay an invoice?

Every invoice should give you everything you need to pay it. Before you start, make sure you can find the following details:

• The supplier's business name, which should match the name on the bank account you're paying.

• The supplier's sort code and account number for a UK bank transfer.

• The invoice number, which you'll use as your payment reference.

• The total amount due, including value added tax (VAT) if the supplier charges it.

• The due date or payment terms, such as "30 days from invoice date".

If you're paying a supplier outside the UK, you'll usually need their international bank account number (IBAN) and bank identifier code (BIC), sometimes called a SWIFT (Society for Worldwide Interbank Financial Telecommunication) code, instead of a sort code and account number. If any of these details are missing or unclear, ask the supplier before you pay. It's much easier to sort out a question now than to chase a payment that went to the wrong place.

How do you pay an invoice step by step?

Paying an invoice comes down to six steps. Following them every time makes it less likely you'll pay the wrong amount, pay the wrong account or pay late.

1. Check the invoice is correct

Compare the invoice against your purchase order, quote or delivery note. Check the quantities, prices and any discounts you agreed, and that the goods or services have actually been delivered. If you're VAT registered and plan to reclaim the VAT, check it's a valid VAT invoice showing the supplier's VAT registration number. If something doesn't look right, raise it with the supplier straight away rather than paying and arguing about it later.

2. Confirm the bank details are genuine

For a supplier you're paying for the first time, or one whose bank details have changed, confirm the details directly with them. Call a phone number you already hold for the supplier, not one printed on the invoice or in the email that sent it. When you set up a new payee, your bank will usually check the name against the account you're paying, a service called Confirmation of Payee. If your bank tells you the name doesn't match, stop and check with the supplier before going ahead.

3. Choose how to pay

Use the payment method shown on the invoice. Most suppliers ask for a bank transfer, though some offer card payment through a payment link or collect payment automatically by Direct Debit. The table further down compares each option.

4. Use the invoice number as your reference

Enter the invoice number in the payment reference field. This lets the supplier match your payment to the right invoice. Without it, your payment can sit unallocated in their account and you may get chased for money you've already paid. If you're paying several invoices in one transfer, send the supplier a remittance advice. This is a short note or email listing which invoices the payment covers.

5. Pay before the due date

Check how long your chosen payment method takes and send the payment early enough for it to arrive on time. Some bank payments take up to three working days, so a payment sent on the due date could still arrive late.

6. Record the payment and keep the invoice

Mark the invoice as paid in your accounting software and keep a copy of it along with proof of payment. If you run a limited company, you must keep records like these for six years from the end of the financial year they relate to. Matching each payment to its invoice also makes your VAT return and year end accounts far quicker to prepare.

Which payment method should you use to pay an invoice?

The right payment method depends on how much you're paying, how quickly it needs to arrive and what the supplier accepts. If you're paying by bank transfer, your bank will send the money using one of three UK payment systems:

• Faster Payments is the system behind most online and mobile bank transfers, and runs day and night, 365 days a year.

• Bacs (originally Bankers' Automated Clearing Services) is used for sending lots of payments in one go, such as a weekly supplier run or payroll, and for Direct Debits. It works on a three day cycle.

• CHAPS (Clearing House Automated Payment System) is run by the Bank of England for large or urgent payments that need to arrive the same working day.

Here's how these compare with the other ways to pay an invoice.

If you pay invoices by business card, connecting the card to your bookkeeping saves you matching each payment by hand. Our guide to connecting your business credit card to accounting software explains how to set this up.

How long do you have to pay an invoice?

You have as long as the payment terms on the invoice or in your contract allow. If you and the supplier haven't agreed a date, UK law treats payment as late 30 days after you receive the invoice or the goods or services, whichever is later. A supplier can agree a deadline beyond 60 days with you, but only if the terms are fair to both businesses. Always check where the clock starts. "Net 30" usually means 30 days from the invoice date, while "30 days end of month" means 30 days from the end of the month the invoice is dated. On an invoice dated 3 March, that's the difference between paying by 2 April and paying by 30 April. Add each due date to your accounting software as soon as an invoice arrives, so nothing slips past its deadline.

Paying late can be costly. Suppliers have the right to charge statutory interest of 8% plus the Bank of England base rate on late business payments, as well as a fixed sum for the cost of recovering the debt. Our credit management compliance checklist sets out how much a supplier can claim. The rules are also set to tighten. The Commercial Payments Bill, introduced in May 2026 and still going through Parliament, would cap payment terms at 60 days for large businesses paying smaller suppliers and make late payment interest mandatory. Until it becomes law, the current rules above still apply.

How can you spot a fake invoice before you pay it?

Invoice fraud happens when a criminal tricks a business into paying money into the wrong account. Often they pose as a real supplier and send a message saying the bank details have changed, or send an invoice for goods that were never ordered. These are the warning signs to look out for:

• The supplier says its bank details have changed, especially by email alone.

• The invoice is for something you didn't order or don't recognise.

• The email address is slightly different from the one the supplier normally uses.

• The message puts pressure on you to pay urgently or keep the payment quiet.

• Confirmation of Payee tells you the name doesn't match the account.

The simplest protection is to call the supplier on a number you already hold before changing any bank details. It also helps to have two people sign off any change to a supplier's details or any unusually large payment.

If you're paying a new supplier for the first time, especially a large deposit, a company credit check shows their credit score, payment history and any county court judgments (CCJs), so you can see whether the business looks stable before money leaves your account. If you do lose money to an authorised push payment (APP) scam, contact your bank straight away. Microenterprises are covered by the APP scam reimbursement rules, which mean banks must usually reimburse up to £85,000 for Faster Payments and CHAPS payments made within the UK. You need to report the scam within 13 months of the payment, and your bank can deduct an excess of up to £100.

What should you do if you can't pay an invoice on time?

If you can't pay an invoice by its due date, speak to the supplier before the deadline passes. Most suppliers would rather agree a short extension or a payment plan than chase an overdue bill, and being upfront protects the relationship. When you get in touch, explain when you expect to be able to pay and offer a part payment now if you can. Confirm anything you agree in writing. It's also worth looking at why the shortfall happened. A cash flow forecast shows the weeks when money going out is likely to run ahead of money coming in, so you can plan for large invoices before they're due rather than after. Every invoice you pay late can also leave a mark on your business credit score, since some suppliers share how promptly their customers pay with credit reference agencies. New suppliers often check that score before deciding how much credit to give you, so paying on time now makes it easier to secure good terms later.

Keep paying invoices on time with a working capital loan

If cash is tight and supplier invoices are stacking up, a working capital loan gives you a lump sum to cover day to day costs like supplier bills, wages and rent. You repay it in fixed instalments, so you can settle what you owe now, protect your supplier relationships and avoid late payment interest. Capitalise can help you compare working capital loans from our panel of 130+ lenders with a single application, and a dedicated funding specialist will guide you from application to funding.