Automating payments with Xero
A particular chore in the life of an entrepreneur is paying supplier bills. It’s a process that consumes cash and time, which doesn’t make it attractive to owners of start up businesses, who are often short of both!
And along with receipt processing and bank reconciliation, it’s the last piece in the puzzle of the bookkeeping process.
Paying bills is traditionally a two step process: entering the bill into your accounting software, and then opening up your business banking portal, typing the same information, then authorising it with a battery powered security token.
Xero has created a method of combining these two steps by originating the bank payment directly from Xero at the same time as the bill is entered into the system - through its Transferwise service. The most helpful thing about it is that it doesn’t require any complicated bank integration – it works from any UK bank account, by transferring the money in one batch from your own account to transferwise, then from transferwise to your supplier.
This immediately marks the bill as paid and reconciled, and once the supplier has been paid before, the system won’t require any further information from you.
The ability to select all of the bills you would like to pay and do so with a single click, is also much more efficient than the normal, transaction by transaction authorisation process required by most business banking platforms.
So it has the potential to save a huge amount of time. The only snag is that this service is an add-on product to the care Xero subscription, and the cost is between 20p – 35p per transaction. So for businesses with lots of small payments to be made, this could really add up.
The alternative, is to download a batch payment file from Xero, then upload this file to your bank making sure to check the status of the payment to make sure it has been processed correctly. Whilst this option is free, you may also incur a per transaction charge from your bank, and this method is certainly more time consuming and prone to error when payments fail.
So if you feel that you are spending too much time paying bills, or are considering hiring a bookkeeper to do it, this could be an innovation that would enable you to spend more time and money growing your business.
We’re a platinum certified Xero partner with a wealth of experience on the inner workings of Xero and also the range of third party applications that plug into Xero’s accounting platform. So drop us a line if you feel you could be getting more out of Xero, or are considering migrating from another accounting package.