Late invoices can cause chaos for your cash flow, so how do you get paid quicker? For any business whose cash flow has seen better days, there’s one thing in particular that can rapidly transform it – recurring, online payments through Xero.
As strategic small business accountants, that’s our forte, and we’re jam-packed full of ideas on shrinking your debtors day and getting your cash flowing in as fast as possible.
Recurring Xero online payments are the green and leafy vegetables of the financial health world – it’s highly advised that you don’t skip them, and instead make it a habit to incorporate them whenever possible.
Why you should set up recurring payments for your small business?
Allocating the right resources.
Better cash flow = better budgeting. By setting up recurring payments you can manage your cash flow more effectively. Not only will it give you peace of mind, but recurring online payments allow you to build better budgets and have a firmer grip on your small businesses finances.
If you require a deposit before you begin a project, late payments aren’t only affecting your cash flow, they’re wreaking havoc on your project or production pipeline. By getting your upfront payments cleared faster, you can get cracking on your project and avoid an endless ebb and flow of twiddling your thumbs in troughs and working every hour of every day in peaks.
Balancing the food chain.
If you’re getting paid late, chances are your suppliers are too. While it may not be your fault that you’re not paying the bills on time, it is your responsibility. Online, recurring payments are a preventive measure you can take to support the delicate ecosystem of the small business food chain.
Forget me not.
Xero says that you’ll be paid 35% faster with a payment gateway in place. Why’s this the case? Electronic fund transfers (EFT) take longer than online payments, and if they take more time – it’s easier to slip their mind. Your clients and customers are most likely as busy as the rest of us, so make it as easy as possible for them to pay your business by giving them an effortless online option.
How do I set up automatic payments in Xero?
People enjoy having options, so give the people what they want by providing multiple payment options. We’re not just talking about paying savings accounts here, don’t forget there are credit cards too.
If you’re looking for a payment gateway, Stripe, Paypal, and Gocardless seamlessly integrate with Xero, and all make the buying process as easy as pie. Just a heads up – instant payment gateways generally cost nothing to set up, but there is a charge for each transaction.
The fee ends up being somewhere between two and four percent of the value of your invoice. However, to help keep the books in order, some providers allow the invoice to pass the cost onto the end customer, and smart and automatic accounting software like Xero, will match the fee to the payment.
While you’re there, it’s never a bad idea to create a few invoice templates with the pay now option and some without.
Having a clear call to action on the invoice, like pay now, means the funds could be cleared well before the due date of your invoice.
Are there other ways to get paid quicker on Xero?
If your customers and clients are going MIA every time an invoice enters their inbox, we’ll wave our magic wand over your current systems, payment options and software. It may not be as simple as saying bippity boppity boo, but it will transform your cash flow and shrivel up your debtor’s day.