In short
Invoice payment (in German Rechnungskauf or Kauf auf Rechnung, also known as purchase on account) refers to a payment method in which the goods are delivered first and the customer only pays afterwards, within a payment term stated on the invoice. In business-to-business trade, this is the norm: purchasing departments order, accounts payable pays after checking the invoice, and 14, 30 or 60 days are usual.
In an online shop, invoice payment means that you as the retailer deliver in advance and bear the risk that the money arrives late or not at all, unless you hand this risk over to a service provider.
The term sounds trivial but is full of decisions. Anyone who offers invoice payment decides on credit checks, payment terms, receivables management, default risk and liquidity. For DACH retailers with a B2B share, it is also a conversion factor: if the buyer cannot or may not pull out a credit card when ordering, the order process may well end there. This entry explains how invoice payment works legally and technically, what operating models exist and what you should look out for when introducing it in a shop.
How invoice payment works
Legally, invoice payment is a perfectly ordinary purchase contract under Section 433 of the German Civil Code (BGB). The seller delivers, the buyer pays. The special feature lies in the timing: payment does not fall due on ordering or delivery but after an agreed period has expired. The seller thereby effectively grants the buyer a short-term, interest-free trade credit. That is exactly why invoice payment is attractive for buyers and risky for sellers.
The process in an online shop
From the point of view of the ordering process, invoice payment usually runs in five steps:
- Selection at checkout: the customer chooses "pay on invoice" as the payment method. Many shops only show the option for certain customer groups, basket values or delivery countries.
- Credit check: in the background, the shop or the integrated payment service provider queries a credit agency or its own scoring. If the result is poor, the payment method disappears or the order is rejected.
- Dispatch: the goods go out, often with a payment term that only starts from dispatch or from the invoice date.
- Invoicing: the invoice is generated and sent to the customer, by post, as a PDF or increasingly as a structured e-invoice.
- Receipt of payment and dunning: the customer transfers the money. If the payment does not arrive, receivables management takes over: payment reminder, dunning letter, debt collection.
In practice, in most shops it is not the retailer itself that handles steps two to five but a provider acting as a payment service provider or payment processor. More on this shortly.
Payment terms, early payment discount and default
The payment term is the period within which the invoice amount must be settled. It is usually stated as a period in days from the invoice date. Sellers often combine it with an early payment discount (Skonto in German), a price reduction for prompt payment. The classic wording on invoices is "2% discount for payment within 10 days, net within 30 days". Mathematically the incentive is considerable: anyone who gets two per cent for paying 20 days earlier achieves a very high annualised return, which is why finance departments often take the discount consistently.
What happens when the term expires? This is governed by the German Civil Code. Under Section 286(3) BGB (in German), the debtor of a payment claim is in default at the latest if they do not pay within 30 days of the due date and receipt of the invoice. Towards consumers, this only applies if the invoice expressly pointed out this consequence. A reminder is also unnecessary if a payment deadline is fixed by the calendar, for example "payable by the 15th of the following month".
From the point of default, the creditor can demand default interest. Section 288 BGB (in German) provides for five percentage points above the base rate for transactions with consumers and nine percentage points for transactions without consumer involvement. If a non-consumer is in default, a flat fee of 40 euros is added. This is not a goodwill rule but the implementation of the European Late Payment Directive 2011/7/EU, which is intended to strengthen payment discipline in commercial transactions.
Retention of title as security
Anyone who delivers on invoice may be delivering goods that the customer has not yet paid for. To protect themselves, many B2B retailers agree a retention of title under Section 449 BGB (in German) in their general terms and conditions: ownership only passes to the buyer once payment has been made in full. If the customer becomes insolvent, the retailer may then be able to demand the return of goods still in stock. In practice this helps above all with high-value, identifiable goods, less with consumables that have long since been used up.
Operating models: who bears the default risk?
The most important decision with invoice payment is who bears the risk in the end. Basically there are three models that differ significantly in effort, cost and liquidity.
| Model | Who checks creditworthiness? | Who bears the default risk? | When does the money arrive? | Typical use |
|---|---|---|---|---|
| In-house receivables management | Retailer (credit agency query, customer base) | Retailer | After the customer pays | Existing customers with a framework agreement, key accounts |
| Invoice payment via a payment service provider with a payment guarantee | Service provider | Service provider | Usually a few days after dispatch, regardless of the customer | New customers in the online shop, B2C and B2B |
| Factoring | Factor | Factor (with or without recourse, depending on the contract) | Immediately on sale of the receivable | Growing retailers with a high invoice volume |
With in-house receivables management, you deliver entirely in advance. This makes sense for existing customers with a long business relationship, where you already know their payment behaviour and creditworthiness. For new customers in the online shop, it is risky and laborious, because you have to connect credit agencies yourself and run a dunning process.
In the model via a payment service provider with a payment guarantee, the provider essentially buys your receivable from the customer. It checks creditworthiness, takes on the default risk and transfers the amount to you regardless of whether the customer pays in the end. In return it charges a fee, which depending on the contract can contain a percentage and a fixed component. In German-speaking countries, well-known providers include Klarna, Ratepay, Billie and Mondu, although their focus differs: Klarna and Ratepay are strong in the consumer business, while Billie and Mondu specifically address invoice payment in B2B. Terms, country coverage and checking rules change, so an up-to-date comparison belongs in the selection process.
Factoring is one level above: you sell your open invoices in bulk to a factor and receive liquidity immediately. This is worthwhile above all when the invoice volume is growing and payment terms of 30 to 60 days tie up your working capital.
Why invoice payment matters so much in B2B
In the consumer business, invoice payment is one of several payment methods and above all an instrument of trust: customers who do not want to entrust money to an unknown shop straight away are more likely to order if they only pay after receiving the goods. In business-to-business trade, more is at stake. There, payment on invoice is simply part of the purchasing processes:
- Purchasing departments are often not allowed to use credit cards or instant payment methods because compliance guidelines prohibit it.
- Orders go through approval steps, cost centres and purchase order numbers. Payment only follows once the invoice, order and goods receipt match.
- Framework agreements and special terms presuppose that payment terms are freely negotiable.
- The accounting process on the customer side is designed around incoming invoices and payment runs, not individual payments per order.
A B2B shop that only offers prepayment and credit card therefore loses exactly the customers who order the most. That is one of the reasons why payment integration belongs on the requirements list early in a replatforming decision, on an equal footing with pricing logic and ERP integration.
Effects on liquidity and key figures
For the retailer, invoice payment has a direct impact on cash flow. A central key figure is days sales outstanding (DSO), i.e. the average time that passes until a receivable is paid. Anyone who grants a 30-day payment term and adds late payments quickly arrives at 40 or more days during which money is tied up. The faster the shop grows, the larger this tied-up amount becomes. Payment service providers with immediate payout or factoring push DSO down to a few days but cost margin. This trade-off can only be made with your own figures: payment default rate, margin, cost of capital and the share of revenue from invoice buyers.
Implementing invoice payment in the shop system
Technically, the implementation depends on the shop system, but the building blocks are the same everywhere. You need an "invoice" payment method, rules on who it is shown to, a connection to credit checking and receivables management, and invoice generation that feeds cleanly into the ERP and accounting.
Visibility by customer group and basket
An important lever is not to offer the payment method to everyone across the board. Common rules are:
- Only approved business customers see invoice payment, for example after a successful check in the customer account.
- New customers only get it after a certain order history or only up to a certain basket value.
- Individual countries or delivery addresses are excluded if the credit check does not work reliably there.
- Differing delivery and billing addresses trigger an additional check, because this is a typical fraud pattern.
Shopware has a rule builder for this, with which payment methods can be tied to conditions such as customer group or basket. The payment integrations themselves usually come as extensions from the respective providers. With Shopify, the range of functions depends more on which payment providers you can connect in the respective market and what additional fee Shopify charges if you do not use Shopify Payments. It is precisely this point that makes a difference in a platform comparison if invoice payment is to run via a specialised provider. You can find details of the fee levels in the comparison Shopware vs. Shopify.
Invoice data and e-invoicing
Invoice payment stands or falls with the invoice itself. In Germany, since 1 January 2025 there has been an obligation in the B2B sector to be able to receive e-invoices. The obligation to issue them is being introduced in stages, depending on the previous year's turnover. For shops this means: the invoice should not just be a PDF but should be able to produce a structured format such as XRechnung or ZUGFeRD that the customer can process without manual retyping. The entry on e-invoicing explains how to classify this.
Data exchange also includes a unique invoice number, the customer's purchase order number, where applicable a cost centre or a Leitweg-ID for public-sector clients, and correct details on tax and payment terms. If any detail is missing, the customer's accounts department refuses approval and payment is delayed without anyone being unwilling to pay.
Example: invoice payment for a technical wholesaler
Imagine a wholesaler of fastening technology that opens its online shop to trade businesses and industrial customers. The range comprises thousands of items, the customers order several times a month, often with baskets in the four-figure range. Credit card payment is out of the question for these customers, and prepayment even more so.
The wholesaler proceeds in two stages. Existing customers with a framework agreement receive invoice payment with an individual payment term and credit limit maintained from the ERP. New customers go through an automated credit check at checkout via a payment service provider which, if approved, takes over the receivable and bears the default risk. This keeps the business relationship with existing customers free of fees, while the risk on first orders is covered. After a few orders and a positive payment history, the new customer moves into the first group.
The effect: the wholesaler reduces payment defaults among new customers without burdening existing customers with fees, and invoice payment turns from a risk into a sales argument. What matters is the clean separation in the shop, because the visibility of the payment method depends on the customer group and not on chance.
Data protection and credit checks
The credit check processes personal data and therefore touches on the GDPR. Legitimate interest (Art. 6(1)(f) GDPR) is regularly considered as the legal basis, for example when the retailer wants to avoid a default risk. In addition, Art. 22 GDPR governs decisions based solely on automated processing that have a significant effect on the data subject. An automatically rejected payment method at checkout can fall under this, which is why providers and retailers should take the information obligations in the privacy policy seriously. If an external service provider carries out the check, you also need a data processing agreement if the provider acts as a processor; with some providers, there is separate controllership. This classification belongs in the legal review before go-live, not in corrections afterwards.
Typical misconceptions
"Invoice payment is the same as buying on payment terms." In everyday B2B practice the terms are often used interchangeably, and that is fine. Strictly speaking, invoice payment describes the payment method at checkout, and the payment term the agreed period that goes with it.
"Anyone who offers invoice payment via a payment service provider no longer has any risk." That is only partly true. With a payment guarantee, the provider bears the payment default risk. What remains open, however, are returns, complaints and disputes: if the customer disputes the delivery or the quality, the provider can return the receivable or offset it. The contract terms decide who is liable in such cases.
"Invoice payment is only for large retailers." Small retailers in particular benefit when a service provider takes over the checking and collection, because otherwise they would need their own accounts receivable department. However, the costs are a real item in the margin and should be calculated in advance.
"A payment term means I can always wait 30 days." No. The law sets 30 days as the latest possible start of default, not as an entitlement to 30 days. A shorter agreed term applies, and contract clauses that unfairly exclude the consequences of default may be invalid under Section 288(6) BGB.
Outlook
Three developments will shape invoice payment in the coming years. First, e-invoicing puts the invoice itself at the centre: anyone who supplies structured data speeds up approval at the customer's end and thus the receipt of payment. Second, the range of specialised B2B payment providers offering invoice payment as an embedded payment method in the shop and quotation process is growing. Third, the integration with B2B functions is becoming closer: credit limits, approval workflows and individual payment terms are moving from the ERP into the shop, so that customers can see immediately at checkout what applies to them. For retailers, this means treating the payment strategy not as an appendage of the checkout but as part of the platform architecture.
Frequently asked questions about invoice payment
What is the difference between invoice payment and prepayment?
With prepayment, the customer pays before delivery and the retailer bears no default risk. With invoice payment, the retailer delivers first and receives the money later. This increases the willingness to buy but shifts the risk to the seller or a service provider.
How long can the payment term be?
In commercial transactions, 14 to 30 days are usual; longer periods are agreed. Under Section 286(3) BGB, default occurs at the latest 30 days after the due date and receipt of the invoice, without the need for a reminder. For consumers, only if the invoice points this out.
Do I have to carry out a credit check as a retailer?
It is not required by law. But it is the most important measure against payment default. Anyone who uses it should observe the data protection requirements and inform customers about it in the privacy policy.
What do invoice payment solutions cost?
Fees vary depending on the provider, volume, industry and risk. A combination of a percentage fee and a fixed amount per transaction is usual. You have to negotiate specific terms with the providers; a flat figure would be misleading.
Can I offer invoice payment only to certain customers?
Yes, and in a B2B environment this is the rule. The payment method can be tied to customer groups, basket values or countries. How this is solved in the shop system depends on the platform and the payment extensions used.
More background is provided by the German Wikipedia overview of Kauf auf Rechnung (in German).