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Your Guide to Ad Hoc Payments

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20222 min read

While many incoming payments are recurring, there are many situations in business when you need to take a one-off, or ad hoc, payment. Ad hoc payment processing has traditionally been limited by high fees and processing times, but there are fortunately plenty of options today. In this guide, we’ll cover the ad hoc payment meaning and give you a few easy ways to streamline the process.

What is an ad hoc payment?

The term ‘ad hoc’ means ‘to this’ or ‘for this purpose’ in Latin, used in modern English to describe any event that takes place once. In this case of payment terminology, an ad hoc payment is simply a one-off payment. It can be issued to a supplier, paid out to an employee, or received from a customer.

The ad hoc payment meaning in invoicing refers to any invoice sent out as soon as work is complete. For example, freelancers often send out an ad hoc invoice when a single, one-time job is complete. Their customer then settles the invoice with a single ad hoc payment. This contrasts with monthly or recurring invoicing, used more for larger projects and ongoing work. Ad hoc payments are considered any payments outside of scheduled invoicing and cheque requests.

Ad hoc payment examples

Here are a few reasons why businesses might make ad hoc payments to their employees:

Petrol allowances
Service charges
Gift vouchers
Adjustments to payroll timesheets

These are paid out separately to the usual invoicing or payroll process.

Small businesses and freelancers alike might also need to take one-off payments for small jobs and single invoices. Ad hoc payment examples might include payment taken for graphic design, copywriting, interior design, or consulting work. In these cases, a service is provided, and a single, one-time payment requested in full at the conclusion of the project.

What are the challenges of ad hoc payments?

Ad hoc payment processing presents many of the same challenges as any other type of payment. If you receive online payments from clients, you’ll need to think about the cost of using a payment processor or gateway. For example, taking one-off credit and debit card payments can cost you between 2-3% of the transaction, eating into your profits. For international payments, the cost is even higher with added currency conversion fees.

Timing is another potential challenge when processing ad hoc payments. It used to be standard for businesses to accept paper cheques to settle one-time payments, but this can take several days if not weeks to clear. Bank transfers have sped up the process, particularly with the UK’s Faster Payments scheme. Yet it can sometimes take a few days for funds to be settled into your account – and that’s assuming that your customers pay invoices promptly.

What are the advantages of ad hoc payments?

There are numerous advantages to sending ad hoc invoices, depending on the type of work performed.

It improves cash flow with a single lump sum payment.
It enables faster payment processing since you can invoice as soon as work is completed.
It’s better suited to freelance creative work.
It offers a way to settle odd payment requests outside of the normal invoicing process.

Ad hoc payments can feel seamless to customers who already have payment details on file with your business. You won’t need to request any additional details, providing a seamless payment experience.

How to process ad hoc payments

Businesses can take ad hoc payments using any payment processing method – from credit cards to direct debit payments. But these often come with the challenges mentioned above, like high processing fees and lengthy settlement times. Open banking has enabled new, innovative ways to seamlessly accept ad hoc payments from customers. With open banking, banks can share data with third parties to streamline financial services like one-time payments. This all comes at lower cost than traditional card processing, with near-instant transfers in comparison to direct debit.

GoCardless lets you take payments instantly with our Instant Bank Pay feature. Real-time confirmation, reduced fees, and optimised conversion rates overcome the challenges mentioned above, providing a more convenient payment experience for customer and business alike.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.