Why Do Invoice Payments Get Declined?
Payment declines happen for various reasons, and understanding these causes helps you address them effectively. Most declined payments aren't due to FreshBooks system errors but rather issues with payment details, bank verification processes, or payment processor restrictions.
Several common factors trigger payment declines. Insufficient funds in your client's account is a frequent culprit. Payment information errors such as expired credit cards, incorrect CVV numbers, or inaccurate billing addresses can also cause declines.
Banks sometimes block recurring charges or require additional verification for unfamiliar transactions. The Address Verification System (AVS) compares the billing address your client provides against what their bank has on file, and any discrepancies may trigger an AVS mismatch error.
Payment processors like Stripe or PayPal might also decline transactions based on their specific review policies. Recognizing these factors helps you diagnose the problem accurately and guide your client toward a solution.
How FreshBooks Processes Payments
FreshBooks integrates with various payment processors to provide a comprehensive overview of all online transactions. The platform's Online Payments settings serve as a central hub where all transactions are tracked and categorized by status: Succeeded, Declined, Pending, or Refunded.
When a payment gets declined, FreshBooks allows you to review detailed payment information. You can see the card type used, the unique payment ID, and the specific reason code returned by the payment processor. This transparency helps identify the exact cause of the decline.
The system also enables you to view transaction history in real-time and filter specifically for "Declined" transactions using the Filters button. Clicking on any declined transaction reveals additional details, often including notes explaining why the transaction failed.
For recurring invoices with declined payments, FreshBooks typically offers a "Retry Payment" option. This feature proves especially useful when the underlying issue, such as outdated payment information, has already been resolved.
Step-by-Step Payment Recovery
Resolving declined invoice payments requires a systematic approach. The process might vary slightly depending on whether you're dealing with a one-time payment or a recurring billing cycle, but the fundamental steps remain consistent.
Before diving into specific actions, assess whether the issue stems from outdated payment information, bank restrictions, or other factors. Once you've identified the likely cause, you can proceed with the appropriate solution. Communication with your client throughout this process helps maintain transparency and trust.
Verify Payment Information
Start by ensuring all payment information on file is accurate and current. Common issues include expired credit cards or mismatched billing addresses that trigger verification failures.
Access your profile by clicking your picture or initials in the top right corner of your FreshBooks dashboard. Navigate to "Billing and Upgrade" from the dropdown menu. Users on the Select plan might see an "Update your credit card" link.
Carefully enter your updated credit card details, paying special attention to the expiration date format, which might require MM/YY or MM/YYYY. Update your billing address by selecting the "Change" link next to Billing Address, ensuring it matches exactly what your bank has on file.
Save your changes by clicking the "Save" button to confirm your updated information. Maintaining current credit card and billing address details significantly reduces the likelihood of transaction declines due to outdated information.
Locate Declined Transactions
FreshBooks provides an efficient way to manage declined payments through its comprehensive invoice history tracking system. This feature helps you quickly identify and address problematic transactions.
Navigate to the "Online Payments" section under Connections and Integrations to view a complete list of all processed transactions. Use the quick filters to display only "Declined" transactions, narrowing your focus to payments that need attention.
Click on any declined transaction to access detailed information about the payment method, processing fees, and any notes from the payment processor explaining the decline reason. This information helps you understand exactly what went wrong with the transaction.
If the invoice qualifies for a retry attempt, look for the "Retry Payment" link at the top of the invoice in the history bar. Clicking this link prompts FreshBooks to automatically reattempt the transaction using the updated payment details.
Contact Relevant Parties
When verification and retry attempts don't resolve the issue, reaching out to the involved parties becomes necessary. This direct communication often uncovers and addresses the root cause of payment declines.
Contact your client to inform them about the declined transaction and suggest they reach out to their bank. Financial institutions sometimes block transactions due to fraud alerts or account restrictions that only the account holder can resolve.
Advise your client to verify their account has sufficient funds, confirm their billing address matches what's on file with their bank, and check that their credit card remains active. These simple verifications often resolve common decline reasons.
Review any error codes or messages FreshBooks provides about the declined transaction. If the system indicates an AVS mismatch or similar technical issue, explain to your client what this means and how they can address it with their bank.
Troubleshooting Common Decline Issues
Different decline reasons require specific approaches. Understanding these technical issues helps you resolve them more efficiently and prevent future occurrences.
Funds and Authorization Problems
When clients lack sufficient funds in their accounts, payments naturally fail. This straightforward issue requires a simple solution: advise your client to ensure adequate funds are available before retrying the payment.
For payments in foreign currencies, remind clients to account for currency conversion rates, bank fees, and exchange fluctuations that might increase the total charge amount. These additional costs sometimes push transactions over available balances.
Bank authorization issues occur when financial institutions flag transactions as suspicious or require additional verification. Advise clients to contact their bank directly to authorize payments from FreshBooks or remove any blocks on their account.
Some banks implement extra security measures for recurring transactions or auto-billing charges. A personal call from your client to their bank's customer service department can often resolve these authorization hurdles quickly.
Data Entry and Verification Errors
Incorrect payment information causes many declined transactions. Double-check that all card details (number, expiration date, and CVV) are entered correctly and current.
Verify that the billing address in FreshBooks matches exactly what's registered with the credit card issuer. Even minor discrepancies like abbreviations or typos can trigger verification failures and result in declined payments.
Address Verification System (AVS) mismatches occur when the billing address provided doesn't match bank records. This security feature helps prevent fraud but can cause legitimate transactions to fail when information doesn't align perfectly.
Ask clients to confirm their current billing address with their bank if AVS errors persist. For trusted recurring customers, you might consider manually overriding the alert and retrying the payment if you're confident in the transaction's legitimacy.
Updating Billing Information
Maintaining current billing information serves as one of the most effective ways to prevent declined payments. FreshBooks makes this process straightforward and user-friendly.
Accessing Account Settings
Keeping your payment details updated requires regular maintenance of your FreshBooks account settings. This proactive approach prevents many common payment issues before they occur.
Log into your FreshBooks account and click on your profile icon in the top right corner to access your account settings. From the dropdown menu, select "Billing and Upgrade" to view and modify your payment and billing information.
Look for the "Update your credit card" link, which appears prominently for users on the Select plan. Click this link to access the credit card information form where you can input updated payment details.
Enter your new credit card information carefully, paying particular attention to the expiration date format. FreshBooks may accept either MM/YY or MM/YYYY formats, so try both if you encounter difficulties.
Modifying Address Details
Your billing address must match exactly what your card issuer has on file. Even small discrepancies can trigger verification failures and payment declines.
Click the "Change" link next to your Billing Address to modify these details. Enter the address exactly as it appears on your credit card statements, avoiding abbreviations or formatting differences.
Remove any unsupported characters such as slashes (/) or hyphens (-) that might cause processing errors. These special characters sometimes interfere with verification systems and lead to unnecessary declines.
After entering all updated information, confirm and save your changes. FreshBooks automatically retries any outstanding subscription payments or pending transactions once you update your billing information, streamlining the resolution process.
Preventing Future Declined Payments
Proactive measures help minimize payment declines and maintain healthy cash flow. Implementing these strategies creates a more reliable payment ecosystem for both you and your clients.
Client Education Strategies
Helping clients understand payment processes reduces decline frequency. A well-informed client base experiences fewer payment issues and resolves problems more quickly when they occur.
Encourage clients to regularly review and update their billing information, especially after receiving new credit cards or moving to new addresses. These life changes often lead to payment declines when information becomes outdated.
Create a simple checklist for clients that reminds them to verify their payment details before submitting. Include items like checking available funds, confirming the billing address matches bank records, and ensuring their card hasn't expired.
Explain important payment concepts like Address Verification System (AVS) in simple terms. When clients understand why certain information matters, they're more likely to provide accurate details and avoid common pitfalls.
Monitoring and Communication
Regular monitoring of invoice statuses helps catch potential issues early. FreshBooks provides tools to track payment status and address problems promptly.
Use the FreshBooks Dashboard to monitor invoice statuses daily. Quickly addressing invoices marked as "Pending" or "Declined" prevents small issues from developing into larger problems that disrupt your cash flow.
Set up automatic payment reminders for recurring billing cycles. These notifications alert both you and your clients about upcoming charges, allowing time to verify payment details and ensure sufficient funds are available.
The FreshBooks mobile app keeps you updated on payment statuses wherever you go. This accessibility enables quick responses to payment challenges even when you're away from your desk, maintaining payment momentum.
Most Common Payment Questions
Clients and business owners often have similar questions about declined payments. Addressing these common concerns helps everyone navigate payment challenges more effectively.
Many users wonder what causes an AVS mismatch and how it affects payments. Address Verification System (AVS) prevents fraud by confirming that the billing address provided matches bank records. When these addresses differ, the system flags the transaction and may trigger a decline.
The process for manually retrying declined invoice payments generates frequent questions. To retry a declined payment in FreshBooks, log into your account, navigate to Online Payments, filter for declined transactions, select the relevant invoice, and click the "Retry Payment" link if available.
When updating billing information doesn't resolve payment issues, additional steps become necessary. Contact your client directly and suggest they speak with their bank about possible restrictions or verification requirements on their account. Meanwhile, double-check that all payment information in your FreshBooks account remains accurate and current.
Clients sometimes ask if you can override declined payments for trusted relationships. While possible in some cases—especially with established clients with good payment histories—exercise caution when overriding processor alerts. These safeguards exist to prevent fraud, so always encourage clients to verify details with their bank when questions arise.
Take Control of Your FreshBooks Payments
Declined invoice payments might seem frustrating, but with the right approach, you can resolve these issues quickly and maintain steady cash flow. FreshBooks provides powerful tools to identify, address, and prevent payment declines.
Understanding why payments get declined represents the first step toward resolution. Whether the issue stems from insufficient funds, incorrect payment information, or bank verification problems, knowing the cause helps you implement the appropriate solution.
Follow the step-by-step processes outlined in this guide to verify payment details, locate declined transactions, and communicate effectively with clients and financial institutions. These systematic approaches transform payment challenges into opportunities for improving your billing processes.
Implement preventive strategies like regular information updates, client education, and proactive monitoring to reduce future declined payments. These practices not only minimize payment disruptions but also strengthen client relationships through transparent communication and efficient problem-solving.
Remember that payment technology exists to simplify business operations. FreshBooks integrates powerful tools for tracking transactions, processing payments, and managing client information—all designed to help your business thrive without payment interruptions.
