Automating client payments in Xero

, posted: 17-Dec-2012 07:00

After a handful of requests to outline what else we've done with Xero, this is a follow on post from my original post about their API.

Cash-flow is king in any small business.  If you aren't invoicing regularly, it becomes easy to miss things.  If you wait too long before chasing up payment on late payers, it becomes harder and harder to get payment as time goes on.

We have a fair few web hosting customers, and two years ago we found that our accounts guy was spending far too much time chasing up late payers.  It was at this time that for the smaller accounts, we would register a credit card against their account to debit any future invoices against.

Xero doesn't support any functionality like this at the moment, so we had to roll our own system.

It starts off that we can enter a credit card, which is saved with our payment processor who gives us back a unique token ID (we don't want to host the raw credit card numbers ourselves) - in our system, we associated this token ID with the appropriate Xero contact, which then lists on the screen below:

screen1-1

With this association it makes it very easy to pay invoices.  The next screen shows all current outstanding invoices, with only the contacts that we have credit card details saved for.

We found that just going through and paying all the outstanding invoices listed wasn't a good idea - it's for this reason we added a checkbox next to each invoice.  The user doing the billing run can select which invoices to include/exclude.

screen2-2

Behind the scenes, the system bills the right card with the right amount - in Xero it also loads a payment against each invoice, making bank reconciliation quick and easy (it also reduces the risk of allocating the payment to the wrong invoice).  At the same time as all this, we email our customer with a summary of which invoices have been paid, for their records.

We use the BNZ Bank as our merchant processor as they are the only NZ bank who support multi-currency natively.

Though we don't have the need for it, it would be relatively simple to extend this process to support direct debits (such as BACS in the UK).  You would store the bank account in Xero against each contact, and instead of debiting credit cards, it would instead produce a text file suitable for uploading to your processing bank.

Please feel free to ask me any questions in the comments below.



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nate's profile

 


I'm Nate Dunn, and I work for 3Bit, own Tuihana Cafe, run the gardening.co.nz forums and a moderator here at Geekzone.

Use Autotask and Xero? Sync data between them with My Accounting Toolbox.

 

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The views and opinions represented on this blog are personal and belong solely to the blogger and do not represent in anyway those of 3Bit Solutions Limited or any other company.

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