Making money is more rewarding than spending it on business obligations. Xero takes some of the drudgery out of your accounts payable duties.
Managing cash flow is a challenge for most businesses. There are many things you can do to encourage customers to pay on time, but you can’t make them.
You can, though, control how and when you pay your bills. And doing these things in a timely, organized fashion is critical. If your suppliers and employees start losing faith in your ability to pay, the relationships you’ve built with them will suffer. And that can impact your standing in the business community.
Whether you have 10 bills a month or 200, you can use Xero’s specialized tools to ensure that your financial obligations, both one-time and ongoing, are met conscientiously.
Xero keeps you up-to-date.
One of the ways that Xero helps you manage your payables is by alerting you when you need to take some action. It does so first thing, every time you log on to the site and look at your “Dashboard” (home page). This screen uses text, numbers, and graphics to provide a financial overview. Besides displaying account balances, income, and expenses, etc., it gives you an instant update on where you stand with your payables.
Figure 1: Here’s an example of what you don’t want to see when you look at Xero’s Dashboard: overdue and unpaid bills, and none in the pipeline.
Xero’s bill-paying tools are simple.
One of the advantages of using Xero for bill-paying is that you will always have a record of bills you’ve paid. You don’t just write a check and stuff it in an envelope, tossing the paper bill when you know you’ve dealt with it. Rather, you enter each bill’s information in Xero so that even after you’ve paid it, you can go back to its original record.
To get started, click on the Accounts tab, then on Purchases. Once you’ve entered one or more bills, you’ll see a graph that shows you how many bills are in Draft form (you’ve at least started entering a bill, but only saved it as a draft), Awaiting Approval, Awaiting Payment, and Overdue. You’ll be able to click on any of these blocks to see a list of the related bills and work with them.
You’ll also be able to click links to view lists of bills that have been paid, as well as those you’ve set up to repeat on a regular basis.
To enter a bill, click the down arrow next to +New and select Bill. A screen like this opens:
Figure 2: Xero’s Bill forms are designed to look like paper bills. They use information you’ve already entered in individual records, such as Suppliers and Items.
In the From field, start typing the name of the supplier, and then select it from the drop-down list that appears (or click on New if applicable). Make sure that the Date is correct, and click the arrow next to the field under Due Date to select from a calendar. You can enter a combination of text and numbers in the Reference field if you wish; this may help ensure that you don’t enter a bill twice.
Note: If you’re converting from another accounting system and want to enter past bills, let us help you do this correctly.
Fill out the rest of the bill the way you would any form in Xero, using the drop-down lists to select from items you’ve already entered. Modify any fields that need to be changed, like Qty and Tax Rate. When you’re finished, click the arrow next to Save in the lower left. You can save it as a draft; continue editing, and then save and submit it for approval; or save and move on to another.
Xero can automate repeat bills.
Xero also makes it easy to enter bills that recur on a periodic basis. To set this up, you’d select Repeating bill instead of Bill from the +New menu on the Purchases page.
Figure 3: Xero lets you automate the process of creating bills that need to be paid on a regular basis, like office rent. You can even opt to have them automatically approved if the amount is always the same.
We’ve just brushed the surface here; there’s a lot more to understand about how bills move through Xero and get paid, as well as how you can search for billing information on the site. If you plan to manage this element of your payables this way, we hope you’ll give us the chance to go through the entire process with you.