For many small businesses, especially those serving other businesses or providing services, the traditional "pay now" model at the point of sale (POS) isn't always practical. You might have clients who need to purchase goods or services throughout the month but prefer to receive a single, consolidated invoice at the end. This "invoice later" or "on account" payment method is crucial for managing business relationships and streamlining operations. But how do you actually set up your POS system to invoice later efficiently, marking orders as unpaid and then consolidating them into one monthly statement? This guide will walk you through the essential steps and best practices to implement this system smoothly.

Understanding "On Account" Transactions

Before diving into the technical setup, it's important to grasp what an "on account" transaction entails. Essentially, it means a customer takes goods or services without immediate payment. Instead, the cost is added to their running account balance with your business. Payment is then expected at a later, agreed-upon date, often via a single invoice covering multiple transactions. This model is particularly common in B2B (business-to-business) settings, like a wholesale supplier or an automotive parts store serving mechanics.

Why "Invoice Later" Matters for Small Businesses

Offering an "invoice later" option can significantly benefit your business by:

Improving customer loyalty: Many businesses prefer the convenience of monthly billing, fostering stronger, long-term relationships.
Increasing sales: Customers might purchase more frequently if they don't need to process individual payments for each transaction.
Streamlining purchasing for clients: Your clients save time and administrative effort by paying one invoice instead of many.
Enhanced cash flow management: While payments are delayed, consolidating invoices can lead to larger, more predictable incoming payments on scheduled dates.

Configuring Your POS System to Invoice Later

Setting up your POS system for "on account" functionality involves several key steps. The specifics can vary depending on your POS software provider, but the general principles remain the same.

Step 1: Enable "On Account" or "Store Credit" Payment Type

Most modern POS systems offer a way to defer payment. Look for options like "On Account," "Store Credit," "Net 30/60," or "Customer Account."

Action: Navigate to your POS settings or payment methods section.
Implementation: Create or enable a new payment type named "On Account" or "Invoice Later." Configure it so that transactions processed with this method are marked as unpaid and associated with a specific customer account.

Step 2: Set Up Customer Profiles and Accounts

To effectively invoice later and consolidate transactions, each business customer needing this service must have a dedicated profile in your POS/CRM (Customer Relationship Management) system. This profile will track all their purchases and outstanding balances.

Action: Ensure your POS allows detailed customer profiles.
Fields to include: Customer name (company name), billing address, contact person, email for invoicing, tax ID (if applicable), and any specific payment terms agreed upon (e.g., "Net 30").
Tip: Assign a unique customer ID to simplify tracking.

Step 3: Processing an "On Account" Sale

When a customer makes a purchase they wish to put "on account," the process should be straightforward for your staff.

During checkout: Scan products as usual.
Payment selection: Instead of cash or card, select the "On Account" payment option you configured.
Customer association: Link the transaction to the correct customer profile. Your POS should then mark this specific order as awaiting payment.
Receipt: Provide a receipt noting the transaction was placed on account, with a zero balance due at that moment.

Consolidating Transactions into a Single Invoice

This is where the real administrative benefit of the "invoice later" system comes into play. You need a method to pull all pending transactions for a given customer and generate a single, comprehensive invoice.

How to Consolidate Customer Sales for Monthly Billing

Not all POS systems are built the same when it comes to consolidating invoices. Ideally, your system integrates with or has built-in accounting features. If not, you might need a workaround.

Integrated Solutions: Many advanced POS systems (or those integrated with accounting software like Xero, QuickBooks) can generate consolidated invoices directly.
- Process: At the end of the billing period (e.g., month-end), go to your customer accounts or billing module. Select the desired customer and a date range. The system should automatically pull all unpaid "on account" transactions for that period and compile them into a single invoice.
Manual/Semi-Manual Solutions: If your POS lacks direct consolidation, you'll need to export transaction data.
- Process: Export a report of all "on account" sales for the specified billing period, filtered by customer. Use a spreadsheet program (like Excel or Google Sheets) to consolidate the line items for each customer. You can then use an invoice template in Word, Google Docs, or a simple accounting program to generate the final invoice.

Takeaway: A modern POS system with strong accounting integration is invaluable for automating consolidated invoicing.

Best Practices for "Invoice Later" Workflows

Successfully implementing invoice later transactions requires careful management and clear communication with your customers.

Clear Payment Terms: Establish and communicate clear payment terms upfront (e.g., "Net 30 days," "Due by the 10th of the following month"). Include these terms on every invoice.
Credit Limits: For business clients, consider setting credit limits to manage your exposure and prevent excessive outstanding balances.
Automated Reminders: If your POS or accounting software supports it, set up automated reminders for overdue invoices. This saves time and ensures timely payments.
Regular Reconciliation: Reconcile your "on account" receivables regularly (weekly or bi-weekly) to ensure all transactions are correctly posted and payments are applied.
Customer Communication: Maintain open lines of communication. If an invoice is approaching its due date or becomes overdue, a friendly reminder call or email can often resolve the issue quickly.

Leveraging Technology for Streamlined Invoicing

Modern tools, especially those incorporating AI, can further simplify the invoicing and accounts receivable process. While AI won't directly set up your POS payment methods, it can assist in related tasks, freeing up your time.

For example, consider how AI can help communicate with customers or create marketing material to promote your flexible payment options. Platforms like Flowtra AI can help small businesses generate dynamic ad copy or even design email templates to announce new payment policies or send soft payment reminders. Imagine drafting a series of email reminders or even creating a quick social media graphic explaining your "invoice later" process, all within minutes.

Your Next Steps

Implementing an "invoice later" system with consolidated invoicing for your small business can significantly improve customer satisfaction and operational efficiency, especially if you serve other businesses or offer services requiring delayed billing. The key is to leverage your POS system's capabilities, establish clear processes, and maintain accurate customer records.

Start by assessing your current POS system's features. Can it handle "on account" payments and consolidate invoices? If not, investigate solutions or integrations that offer this crucial functionality. By taking these steps, you'll build a more flexible and customer-centric payment system that supports your business growth.

Ready to refine your business operations and free up more time for customer-facing tasks? Explore how modern tools can help you streamline operations, from invoicing to marketing outreach.