5 Ways In Xero To Manage Accounts Receivable Accounts Receivable In Xero Must See!
Summary
TLDRThis video offers five strategies to manage account receivables effectively, ensuring timely payments for small businesses. It emphasizes simplifying payment processes with various services like credit cards and Polly for bank transfers, setting up automated email reminders for overdue invoices, proactively following up with clients, checking their credit history, and using statements instead of repeated invoices for clarity. These methods aim to reduce late payments and improve cash flow.
Takeaways
- đŒ Make it easy for clients to pay: Offering various payment options, including credit cards, can improve cash flow despite the fees involved.
- đ Set up payment services: Utilize services like PayPal, Stripe, and others that integrate with accounting software to facilitate easy payments.
- đł Consider non-credit card options: Polly payments, for instance, offer bank transfer options that are convenient and less costly than credit cards.
- đ§ Send email follow-ups: Enable and customize automated email reminders for overdue invoices to prompt clients to pay.
- đïž Customize reminder settings: Adjust the timing and tone of reminder emails to suit your business relationship with clients.
- đ Personal follow-ups: Regularly check on overdue accounts and personally contact clients to discuss payment issues and timelines.
- đ Check client credit history: Use features within accounting software to assess a client's creditworthiness and manage risk.
- đĄ Add fees to invoices: For platforms like eBay, include payment processing fees in the invoice total to pass on costs to clients.
- đ Use statements instead of invoices: Send monthly or weekly statements to provide a clear overview of outstanding balances and payments.
- đ« Avoid sending duplicate invoices: Sending the same invoice multiple times can be unprofessional and confusing for clients.
- đ Keep records of communications: Note down client commitments and follow-up actions to track payment promises and next steps.
Q & A
What is the average payment delay for businesses in New Zealand according to the small business insights by Zero?
-The average payment delay for businesses in New Zealand is 8.9 days.
Why is it beneficial for businesses to accept credit card payments despite the associated fees?
-Accepting credit card payments can improve cash flow and make it easier for clients to pay, which can lead to receiving payments earlier, outweighing the fees charged by the credit card company.
What is one of the payment services mentioned in the script that facilitates bank transfers?
-Polly payment is mentioned as a service that facilitates bank transfers, making it easier for clients to pay through their internet banking.
How can businesses set up different payment options in Xero?
-Businesses can set up different payment options in Xero by navigating to the 'Payment Services' section under 'Settings' and selecting from the list of available providers.
What is the purpose of enabling invoice reminders in Xero?
-Enabling invoice reminders in Xero helps businesses to automatically follow up with clients who have not paid their invoices by the due date, improving the chances of timely payments.
What customization options are available for invoice reminders in Xero?
-Invoice reminders in Xero can be customized in terms of the number of days before the due date to send the reminder, the tone of the email, and the inclusion of specific information such as contact name, company name, invoice number, and total amount.
How can businesses manually follow up on overdue invoices in Xero?
-Businesses can manually follow up on overdue invoices in Xero by clicking on the overdue amount in the dashboard, accessing the client's details, and contacting them directly to discuss the payment.
What is the significance of checking a client's credit history in Xero?
-Checking a client's credit history in Xero helps businesses assess the risk associated with a client, ensuring they have a good credit standing before proceeding with business transactions.
Why is sending a statement preferable to sending multiple invoices for the same outstanding amount?
-Sending a statement is preferable because it provides a clear overview of the outstanding balance and reduces confusion for the client, making it easier for them to understand and make the payment.
How often should businesses send statements to their clients according to the script?
-The script suggests sending statements on the first of each month or, if preferred, on the first of each week.
What is the recommended action when a client requests to resend an invoice that they claim not to have received?
-The recommended action is to resend the invoice with just a few clicks, ensuring the client has the necessary document to proceed with the payment.
Outlines
đŒ Streamlining Account Receivable Management
The video introduces five methods to manage account receivables effectively, emphasizing the importance of quick payments for small businesses. It highlights a statistic showing that New Zealand businesses are paid on average 8.9 days late. The first method discussed is simplifying the payment process for clients, suggesting the use of various payment services integrated with Xero, such as credit cards, PayPal, and Stripe. The video also mentions Polly, a bank transfer payment option that facilitates easy and fee-less transactions. The focus is on improving cash flow and reducing the days it takes to receive payments.
đ§ Automating Email Follow-ups for Invoices
The second strategy for managing account receivables involves setting up automated email reminders for clients with overdue payments. The video demonstrates how to enable and customize invoice reminder settings within Xero's dashboard, allowing for personalized messages at varying intervals post the due date. It discusses the ability to include placeholders for dynamic content such as contact names, company names, and invoice details. The feature aims to prompt clients to make payments and can be adjusted based on individual tolerance levels for unpaid amounts.
đ Proactive Follow-up on Overdue Accounts
The video script outlines a proactive approach to contacting clients directly when invoices are overdue. It suggests reviewing overdue accounts regularly and using the contact details provided in Xero to reach out to clients. The process includes discussing payment issues, negotiating payment terms, and recording the expected payment dates. This method is highlighted as an effective way to quickly resolve payment delays and maintain a clear record of client communication within the system.
đ Assessing Client Credit History for Risk Management
To prevent issues with non-payment, the video recommends checking clients' credit history using Xero's integrated tools. It explains how to access and interpret risk ratings for businesses, which can help in making informed decisions about extending credit. The script mentions the option to purchase detailed credit reports for clients with higher risk ratings to better understand their financial standing and potential creditworthiness.
đ Utilizing Statements for Clear Payment Tracking
The final method discussed in the video is the use of statements as a professional and organized way to follow up on payments. It advises against repeatedly sending the same invoice, which can lead to confusion and delay in payments. Instead, the video promotes sending statements on a regular basis, such as at the beginning of each month or week, to provide clients with a clear overview of their financial obligations. This approach helps in reducing account receivables and ensuring timely payments.
Mindmap
Keywords
đĄAccount Receivable
đĄCash Flow
đĄPayment Gateway
đĄCredit Card Fees
đĄPolly Payment
đĄInvoice Reminders
đĄOverdue Accounts
đĄCredit History
đĄStatements
đĄDirect Debit
đĄRisk Rating
Highlights
Managing account receivable is crucial for small businesses to ensure timely payments.
New Zealand businesses are paid on average 8.9 days late, impacting cash flow.
Making it easy for clients to pay via credit card can improve cash flow despite fees.
Zero integrates with various payment services, including credit cards and bank transfers.
Polly payment offers a bank transfer option that simplifies the payment process for clients.
eBay allows adding credit card fees to the invoice amount for convenience.
Setting up payment gateways on invoices can facilitate immediate payments.
Email reminders can be automated in Zero to prompt clients for payment.
Customizing email reminders with client and invoice details can personalize the follow-up.
Adjusting the frequency and tone of email reminders can adapt to the payment status.
Manually following up on overdue invoices can be effective in securing payments.
Checking clients' credit history in Zero can prevent potential bad debts.
Using company registers to assess client creditworthiness is a hidden feature in Zero.
Sending statements instead of individual invoices can reduce confusion and improve payment follow-up.
Statements provide a clear overview of outstanding balances and due payments.
Regularly monitoring and following up on overdue accounts receivable is key to timely payments.
Providing options for different payment methods and ensuring good client credit history can minimize late payments.
Transcripts
[Music]
in this video I'm going to show you five
different ways and zero that you can
manage your account receivable and make
sure you get paid fast as you can see in
a small business insights done by zero
and average businesses in New Zealand
get paid eight point nine days late and
so this is average between three hundred
thousand subscribers of zero in New
Zealand so it's caught but and we can do
so many things to reduce that days and
get paid at least on time if not late
so let's get into it so the first thing
you have to do is make it very easy for
your clients to pay you and lots of the
businesses are thinking about credit
card as a cost center because they have
to pay one or two or three percent of
the fees to the credit card company but
the fact is by receiving those payments
earlier it helps your cash flow and
improves your business and if you can
make it as easy as possible for your
clients to pay you that would make it
more efficient for you and less hassle
and better cash flow so let's see how we
can set up the payment so if you go
sitting general sitting on the general
sitting if you scroll down we have
payment services and not all the payment
services are credit cards so after more
credit card or there is one or two that
you can use to get paid in other ways so
if we say add payment services you can
see the lists of them so authorized
Knight Braintree DPS eBay PayPal
Lestrade you can go have a look they're
all different depends if you have your
merchant account with your bank then you
can use some of them if you don't you
use the ones like PayPal and stripe that
basically they provide you with that
merchant facility
if we're going to put a link to this but
if you go to this list basically that
provides all of the different payment
providers that you can use and zero
because as you can see these are the
ones that they directly integrate it but
you can use a custom URL and make it
happen that way
so one of the ones that it doesn't
involve credit card is a Polly payment
so Polly payment is a bank transfer
payment so when the customer receive an
invoice they receive a little link on
the bottom of that and when they click
on that it takes them through their
internet banking and as soon as they put
the username password I told basically
repopulate your bank accounts and their
mounds and everything so they don't have
to go enter all the details on invoice
number and the amount an account number
to pay you it makes it a lot easier for
them and it doesn't cost like the credit
cards do so Polly is one of the options
that you can use and you can see lots of
different options and you can see all
the reviews that people have about these
services and why suppose we use eBay
because one of the things about eBay is
they tell you you would be able to add
the fees for the client as a convenient
way so if somebody wants to pay us they
pay that percentage that we get charged
from the credit card company and it will
be added to the ambu's because most of
the invoices are paid by direct debit so
if somebody want to pay by credit card
here they can do it they can get point
and in the meantime you can add that and
it'll update the invoice and zero and
reconciles easily with the payments that
we receive so that's the first tip so
try to make it easier for the client to
pay you by setting up the payment
gateway and and it disappears and the
invoice and they can click and they
pay you straight away the second one is
sending an email follow-up to the
clients so if you go to invoice setting
under sitting you can see invoice
reminder tab on the top here so if you
click on invoice reminder it's by
default disabled you can enable it and
then you can change all the settings so
you can say on seven day overview and 14
day - all day you can add more reminder
where you can change this from seven
days to two days so basically what will
happen after they have been paid on over
the date so on a due date if they
haven't paid seven day after they gonna
receive this email so you can edit this
email however you want it you can start
from more friendlier emails and just go
a bit harsh every time that they haven't
paid you and you can have different
different way of setting this up from
the overdue by seven days or do you and
so you can even send before it's due so
you can say hey do you in seven days I
want them to receive an email so they
know that is in seven days so they can
they can pay me you can change the days
you can also customize it however you
want with these placeholders so you can
put the contact name so I puts the
contact name their company name any of
the codes and currency code invoice
number invoice total all the references
so you can put lots of information in
there and that is customized so that
that client and this will bring the
information from the zero wherever is
available with is a contact name or
invoice amount of GST whatever it is so
you can edit that and however you want
it and how many you want you can send
these emails also you can change the
settings here whether to send a link
payment which is suggested PDF which is
great and you don't want to be worried
about a dollar or two or ten dollars or
whatever is your tolerance for not
paying
Bill's you can't put it there somebody
might have paid the whole invoice and
they just and $2,000 they paid I do not
$1 difference you don't want to them to
receive an email you want to basically
either write it off or contact a man you
by phone and ask them for a dollar so
you can do that if you wish so when you
enable this you can disable it for
certain contexts so you can go to
contact level and disable those so
that's the second way so you can send
them email reminder and make sure that
the system automatically will remind
them and asking them for payment the
other things that he can do is if you go
to your dashboard you have all your
overdue accounts here so if I look at
this demo account these are the bills
sorry these are the invoices that they
need to pay me if I do click on this
overdue ones it's also just maybe every
every day or every week you spend a bit
of time on this on each line you can see
a little plus here so you can get do
this or you can outsource it to a PA
company or if you have a administer that
you can do this for you so you can click
on this plus all the details of that
client will come up and you said see the
contact person for this is Bob I'll pick
up the phone the phone numbers in front
of me and I contact Bob and say hey Bob
and we had an invoice for 234 dollars
which was D on 31st of August he haven't
paid it when can you pay this and what's
the problem so by doing that you can put
a note here hey Bob said that is sorry
and the waiting for payments or you can
put whatever notes you want here and
then say okay Bob when you can pay me
and Bob say okay by the end of this week
I'm gonna pay you and save this so
what's that going to do it's gonna put
the expected day here which is blue and
if Bob doesn't fire that date it's gonna
go red again and you can
you can keep doing that too you get the
payment so this is a good way and a very
fast way to follow up your account
receivable the other thing that you can
do at which to prevent not getting pay
is just check your clients make sure
that they have a good credit history
this is one of those hidden things in
Xero that you might not know about it so
one of the things that is an 0 is if you
start typing and the clients name I'm
just going to use conveyancing shop
because I know them and it'll bring from
company's office the detail of all the
names based on that so this is assuming
this is business-to-business so if
you're working with the consumer it's
not going to work this is only for
businesses that they have a company and
their registers and their company's
office so for example if I want to work
with convincing shop often and limited I
can click on it until we populate all
the names of all the address and
everything is there all the company
number is there and as you can see here
I've got a risk rating here which is low
so I don't have much risk with this
client I can deal with them if the risk
was an orange or red then you can click
here and order the report to see waters
in the credit report what sort of bad
credit they had are you happy to deal
with this client from now on because
this is a risk that you're taking and
you need to know how the client is
performing before if they have a bad
credit and if they had any default so
you can see this information and you can
purchase the report the report I think
at the moment is about $20 or more or
less and you can pay the report and save
a lot of hassle later on in your
business the last but not least I see so
many businesses that they using Xero and
if somebody doesn't ID and they just
keep sending the same invoice again and
again and again first of all is not
professional second of all if they have
more than invoices they're going to
receive so many different invoices and
they get confused and there is more
excuse for them not pain
so the best way to follow up the
invoices is by sending statement and try
to send statement on the first of each
month or if you want to do the first of
each week you can do it and are sending
a statement and you can basically say
outstanding as the 1st of August or I
want to do it on as off for example
let's say last week or the week before
or whatever so I can set that date and
get my update statements and then I can
go here and say ok this new client I
want to I want to fall off so you can
email and again you would have the email
addresses here so if it will
pre-populate there this is a demo
company so the emails aren't up there
and then you can change the body of the
email to customize it and you can
customize this under setting as well so
it goes for each and all of your
statements that you're sending out it's
gonna be the same so by doing that the
send statement they can exactly see
what's opening balance what are the
invoice is outstanding and how much they
have to pay you by sending them invoices
again and again it creates hassle and
confusion for them on this side so
sending a statement is the best way to
follow up payment rather than sending
invoices sometimes after you're sending
a statement say ok I haven't received
that statement I haven't received that
invoice can you send it to me or well
you can send that it moves again it's
just a couple of clicks away and you can
do that so you have to make sure
monitoring this and make sure that it is
less in red here on over deal as much as
possible and or following up our email
but make sure that they can pay for
credit card or different ways or make
sure that they have a good credit and
sending the statement you can just push
that and reduce your account receivable
payment dates to minimum and get paid
all the time on time if you have any
questions get in touch with us otherwise
there are links on the bottom of this
video which explain to you and
everything all the resources that are
mentioned in this video
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