5 Ways In Xero To Manage Accounts Receivable Accounts Receivable In Xero Must See!

Summary

This 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

• 💼 Make it easy for clients to pay: Offering various payment options, including credit cards, can improve cash flow despite the fees involved.
• 🔗 Set up payment services: Utilize services like PayPal, Stripe, and others that integrate with accounting software to facilitate easy payments.
• 💳 Consider non-credit card options: Polly payments, for instance, offer bank transfer options that are convenient and less costly than credit cards.
• 📧 Send email follow-ups: Enable and customize automated email reminders for overdue invoices to prompt clients to pay.
• 🗓️ Customize reminder settings: Adjust the timing and tone of reminder emails to suit your business relationship with clients.
• 📞 Personal follow-ups: Regularly check on overdue accounts and personally contact clients to discuss payment issues and timelines.
• 🔍 Check client credit history: Use features within accounting software to assess a client's creditworthiness and manage risk.
• 💡 Add fees to invoices: For platforms like eBay, include payment processing fees in the invoice total to pass on costs to clients.
• 📈 Use statements instead of invoices: Send monthly or weekly statements to provide a clear overview of outstanding balances and payments.
• 🚫 Avoid sending duplicate invoices: Sending the same invoice multiple times can be unprofessional and confusing for clients.
• 📝 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

00:00

💼 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.

05:00

📧 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.

10:01

📞 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.

🔍 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.

📄 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.

Keywords

💡Account Receivable

Account receivable refers to the money that a business is owed by its customers for goods or services that have been delivered or used but not yet paid for. In the context of the video, managing account receivable efficiently is crucial for improving cash flow and ensuring timely payments. The video suggests various methods to manage this, such as setting up easy payment options and sending reminders to clients.

💡Cash Flow

Cash flow is the movement of money into and out of a business. Positive cash flow is essential for a business's survival and growth. The video emphasizes the importance of receiving payments quickly to maintain a healthy cash flow, suggesting strategies like accepting credit card payments and setting up automatic reminders for clients to pay invoices.

💡Payment Gateway

A payment gateway is a service that authorizes credit card payments for e-commerce applications. In the video, setting up a payment gateway is recommended to facilitate easy and immediate payments from clients, thereby reducing the time taken for businesses to receive their payments.

💡Credit Card Fees

Credit card fees are the charges that businesses pay to credit card companies for processing transactions. The video discusses the trade-off between incurring these fees and the benefits of receiving payments faster, which can improve cash flow and overall business efficiency.

💡Polly Payment

Polly payment, as mentioned in the video, is a bank transfer payment method that simplifies the payment process for clients by automating the entry of bank account details. This method is highlighted as a user-friendly alternative to credit card payments that does not incur the same fees.

💡Invoice Reminders

Invoice reminders are automated email notifications sent to clients as a gentle nudge to pay their outstanding invoices. The video explains how to set up these reminders in the Xero accounting software, which can be customized and scheduled to be sent at specific intervals after the invoice due date.

💡Overdue Accounts

Overdue accounts refer to the invoices that have not been paid by their due date. The video suggests regularly reviewing overdue accounts and following up with clients directly to ensure payments are made promptly. This proactive approach helps in managing accounts receivable effectively.

💡Credit History

Credit history is a record of an individual or business's ability to repay borrowed money. In the video, it is suggested that businesses should check the credit history of their clients to assess the risk of non-payment. This can help in making informed decisions about extending credit to clients.

💡Statements

Statements in the context of the video refer to periodic summaries of a client's account activity, including outstanding invoices and payments. The video recommends sending statements instead of individual invoices to clients as a more organized and professional way to follow up on payments.

💡Direct Debit

Direct debit is a payment method where a client authorizes a business to withdraw funds directly from their bank account. The video mentions that most invoices are paid by direct debit, indicating it as a common and efficient payment method for recurring payments.

💡Risk Rating

A risk rating is an assessment of the likelihood that a business will default on a payment. The video discusses using risk ratings to evaluate the creditworthiness of clients, helping businesses to manage the risk associated with extending credit and to decide whether to proceed with transactions.

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