How to Manage Subscriptions in Xero: Handling Recurring Billing

Managing subscriptions can be frustrating for any business using accounting software like Xero.

Luckily, Xero offers powerful tools to automate recurring billing and simplify subscription management.

In this guide, you'll learn key techniques for taking control of subscriptions in Xero - from changing plans to preventing failed payments. Discover how to leverage automation for invoices, payments, and analytics while optimizing integrations with subscription management platforms.

Mastering Subscription Management in Xero

Managing subscriptions and recurring billing can be a major pain point for many businesses. However, with the right tools, it doesn't have to be.

Xero provides a robust subscription management system that helps automate many of the tedious tasks associated with tracking and billing recurring payments. Here are some of the key benefits of using Xero for subscription management:

• Automated Billing: Xero enables you to easily set up recurring invoices that go out automatically on whatever schedule you define - weekly, monthly, annually, etc. This saves you time from having to manually generate invoices every billing cycle.

• Multiple Payment Options: Customers can pay their recurring Xero invoices by credit card, bank transfer or PayPal. Xero will store their payment information to streamline future transactions.

• Subscription Tracking: You have clear visibility into which customers have active or past due subscriptions within Xero. This helps ensure prompt payment and simplified subscription management.

• Integration with Other Apps: Xero offers hundreds of integrations with other software solutions. This allows you to connect Xero to other tools you use to fully automate your workflows around subscription management and billing.

By leveraging Xero's capabilities for subscriptions and recurring payments, you can simplify operations, eliminate manual processes, and improve cash flow. The power of automated billing and tracking through cloud technology makes managing subscriptions easier than ever.

How do I take over a subscription in Xero?

To take over a subscription in Xero, the following steps must be taken:

1. The current subscriber needs to initiate a subscription transfer from within their Xero account. They can find this option under the "My Settings" section.

2. An email invitation to take over the subscription will be sent to the new subscriber. This email will contain a link that must be clicked to accept the transfer.

3. Upon clicking the link, the new subscriber will be asked to either sign in to their existing Xero account or create a new Xero account.

4. The new subscriber can then choose to keep the same subscription plan or select a different pricing plan. However, if transferring a free trial subscription, it must remain a free trial until after the transfer is complete.

5. Once the new subscriber accepts and completes the transfer request, they will have full control over the subscription billing and account details from that point forward.

The key things to note are that the current subscriber must initiate the transfer, the new subscriber must accept the transfer via email link, and billing/account control gets transferred upon completion. So as long as both parties complete their necessary steps in the process, switching subscription ownership can be a smooth transition.

How do I change my subscription plan in Xero?

To change your Xero subscription plan:

1. Click on your organization name in the top right corner of your Xero dashboard, then select "Subscription and billing"
2. Click the "Manage Subscription" button
3. Click the "Change plan" button
4. Select the new pricing plan you want to upgrade or downgrade to, then click "Continue to add-ons"
5. (Optional) Select any additional features like Projects, Expenses, Planday, or Analytics Plus that you want to add or remove
6. Click "Continue to review & pay" to confirm the changes

The change to your new subscription plan will take effect at the start of your next billing period. If you have prepaid for any unused services, you will receive a credit that gets applied to your next invoice.

Downgrading your plan can only be done at the end of your current billing period. Upgrades take effect immediately. Make sure to review all features of the new plan before confirming any changes.

If you need any help changing plans or have questions about billing, you can contact Xero support directly from within your account. The support team is available to assist you.

Where are subscription invoices in Xero?

To view your previous subscription invoices in Xero:

1. Click the organisation name in the top right corner
2. Select Subscription and billing
3. Click Manage Subscription
4. Click the Billing accounts tab
5. Click the menu icon

   

   next to the billing account you want to update
6. Select View invoices

This will display all the invoices associated with that particular billing account. You can review charges, download PDF copies of the invoices, check billing details, and more.

Key things to note:

• Invoices are generated automatically based on your subscription plan and billing cycle
• You'll receive a separate invoice for each billing account
• Invoice details include subscription name, billing period, charges broken down by service/add-on, taxes, and total amount due

Managing subscriptions and billing in Xero can feel overwhelming initially. But with some guidance on where to access key information, you can easily stay on top of your recurring SaaS expenses.

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Setting Up Automated Billing for Recurring Invoices in Xero

This section covers how to configure recurring invoices for automatic billing in Xero, including frequency, start/end dates, and attaching subscribers, to streamline the manage subscriptions process.

Enabling the Recurring Invoice Feature in Xero

To start using recurring invoices in Xero:

1. Navigate to the Settings menu and select "Recurring Invoices"
2. Toggle the switch to enable automated recurring billing
3. Click "Save" to activate the feature

This will unlock the ability to create recurring invoice templates that can be automatically sent out on set schedules.

Creating a Recurring Invoice Template in Xero

Follow these steps to build a recurring invoice template:

• Go to Accounts > Recurring Invoices > New Recurring Invoice
• Enter an invoice number and reference
• Select the customer contact to link the billing cycle
• Input the billing frequency (weekly, monthly, etc.)
• Set the start and end dates for automated billing
• Add invoice line items, quantities, tax rates, etc.
• Attach any additional information
• Click "Save Recurring Invoice"

This will save the billing details as a template for automated recurring invoicing.

Connecting Recurring Invoices to Customer Contacts

To connect recurring invoices to customer contacts:

• Navigate to the desired customer contact
• Scroll down and click "Add recurring invoice"
• Select the recurring invoice template
• Set the next invoice date
• Click "Add recurring invoice"

The recurring invoice will now be attached to the customer contact on the defined billing frequency.

Customizing Billing Frequencies and Terms

Xero allows you to customize billing details:

• One-time or recurring billing
• Weekly, monthly, quarterly, annual frequencies
• Custom billing schedule by date
• Custom payment terms per customer
• Pro-rated billing options
• Volume-based tiered billing

Set up billing details during recurring invoice template creation to fit your various subscription services and customer contracts.

Optimizing Subscription Management Software Integration with Xero

Selecting the Right Subscription Management Integration

When integrating a subscription management solution with Xero, it's important to choose a platform that aligns with your business needs. Key criteria to consider include:

• Compatibility with Xero: Ensure the software easily connects with Xero via API or other integration methods. This enables smooth data flows between the systems.

• Subscription plan flexibility: Choose a system that supports your diverse subscription offerings, whether one-time purchases, free trials, recurring payments, usage-based billing, etc.

• Automation capabilities: Opt for a subscription platform that can automate processes like recurring billing, dunning, renewals, and subscription status updates. This saves considerable manual effort.

• Customizability: Seek out solutions that enable custom packages, billing schedules, subscriber communication rules, and other flexible options tailored to your subscribers.

• Reporting and analytics: Robust reporting functionality provides visibility into subscriber metrics to optimize offers.

Integrating and Configuring Subscription Management Tools

Once you've selected a compatible subscription management platform, proper integration configuration is key for managing subscriptions in Xero:

• Set up API connections between the software and Xero to enable real-time data synchronization. Work with developer teams on both sides to ensure smooth integration.

• Map relevant data fields like customer details, product info, payment data, etc. to share key details across both systems.

• Configure business rules and workflows for handling processes like recurring billing, failed payments, subscription status changes, and renewals based on your needs.

• Test thoroughly before launch to validate correct data flows, automated processes, and reporting. Fix any issues before subscribers begin signing up.

Synchronizing Data Between Xero and Subscription Software

Smooth data synchronization between Xero and integrated subscription tools is critical for subscription businesses:

• Customer data like contacts, billing details, and account history should correctly flow from Xero to subscription platforms to eliminate duplicate data entry.

• Subscription orders placed in the subscription tool should sync to Xero in real-time to enable accurate financial reporting.

• Payment information like automatic recurring billing and failed payment details should update in Xero for revenue projection purposes.

• Subscription status changes like upgrades, downgrades, cancellations, and renewals must sync across both systems to stay aligned.

Proactively monitor data integration to ensure correct synchronization. Troubleshoot and fix any lags or errors immediately.

Automating Subscriber Notifications and Updates

Integration between Xero and subscription management software also enables automating subscriber communication for superior customer experience:

• Welcome emails when customers first subscribe
• Payment receipts confirming billing
• Renewal and reactivation reminders before subscriptions lapse
• Upsell/cross-sell promotions to increase revenue
• Surveys to gather customer feedback

Setting up rules and workflows based on subscription status changes is key for automated subscriber communication. This saves considerable manual effort while delighting customers.

Test notification flows thoroughly before launch. Monitor subscriber reactions and fine-tune as needed to optimize customer satisfaction.

Automating Subscription Payments with Xero

Automating subscription billing can streamline cash flow for businesses relying on recurring revenue models. Xero provides several features to easily set up and manage automatic customer payments.

Setting Up Automated Payment Gateways in Xero

To enable automated billing in Xero, you first need to integrate a payment gateway that supports recurring payments, such as Stripe or PayPal. Here are the steps:

1. Navigate to Settings > Payment Services and click "Connect" next to your desired gateway
2. Enter your payment gateway credentials and complete the setup process
3. Enable the "Customer bank accounts" and "Repeating invoices" options for that gateway

Once connected, Xero can automatically charge customer bank accounts or cards on file when invoices are due.

Configuring Payment Reminders for Subscribers

Xero allows creating automated payment reminders to notify customers ahead of upcoming charges:

• Go to Settings > General Settings > Automatic Payment Reminders
• Choose the number of days in advance reminders should be sent
• Customize the reminder template as desired

Setting up reminders reduces late and missed payments from forgetful subscribers.

Handling Payment Failures and Retries

Despite automated reminders, some automatic payments may still fail initially. Xero provides tools to handle these scenarios:

• Automatic retries with custom retry periods
• Partial payments when full amount fails
• Email notifications to customers on failed payments
• Reports to monitor failed payment rate

Configuring failure workflows promotes subscriber retention by avoiding disruption.

Monitoring Automatic Payment Success Rates

Under Reports > Aged Receivables, Xero offers the "Payments Collected" report to view:

• Total payments collected automatically
• Overall automated payment success rate
• Success rates by customer or subscription type

Monitoring these metrics helps maximize the effectiveness of automated billing in Xero.

Leveraging Xero's Cloud Solutions for Subscription Analytics

Using Xero's cloud-based reporting provides valuable insights into subscription performance and recurring billing metrics.

Generating Subscription Revenue Reports in Xero

Xero enables tracking income from subscriptions over custom date ranges. This empowers making data-driven decisions about subscription offerings.

• Generate detailed reports on subscription revenue over the last month, quarter, or year
• Filter reports by subscription type, customer segment, or other parameters
• Identify trends in subscription adoption and retention over time
• Benchmark performance of different subscription plans

By leveraging Xero's reporting, businesses gain transparency into the health of their subscription programs.

Analyzing Failed Payment Reports for Actionable Insights

Failed payment reports in Xero provide actionable insights by revealing problematic subscriptions:

• Quickly identify customers with poor payment history
• Dig into the specifics - was the credit card expired or insufficient funds?
• Make informed decisions about pausing services or altering subscription plans
• Develop targeted retention campaigns for subscribers at risk of churn

Reviewing failed payments regularly safeguards revenue and enables optimization.

Reviewing Customer Statements for Subscription Activity

Xero customer statements serve as detailed records of all subscription activity:

• Audit subscription sign-ups, cancellations, payments, refunds etc.
• Verify accurate billing and charges for the subscription term
• Identify opportunities to upsell customers to higher tier plans
• Confirms health of recurring billing processes and integration

Statements facilitate transparency into subscription transactions.

Benchmarking Subscription Performance Metrics

Benchmarking against industry standards highlights areas for improvement:

• Compare subscriber acquisition costs vs. industry averages
• Gauge average revenue per account metrics
• Evaluate subscriber lifetime value and retention
• Uncover stronger performing subscription plan types
• Inform operational changes to boost KPIs

Benchmarking provides context to gauge subscription success.

By fully utilizing Xero's reporting tools, businesses obtain granular visibility into the performance of subscriptions and recurring billing, enabling data-driven decision making.

Conclusion: Streamlining Recurring Billing and Subscription Management in Xero

Managing subscriptions and recurring billing is crucial for modern businesses relying on subscription revenue models. Xero provides powerful tools to automate this process and optimize cash flow.

Here are the key takeaways:

• Use Xero's repeating invoices feature to set up automated billing based on custom schedules. This saves time over manual invoicing.

• Connect Xero to payment gateways like Stripe to instantly charge customers when invoices are generated. This reduces late and missed payments.

• Leverage Xero's reports to gain visibility into subscription performance. Identify high-value subscribers to retain and struggling ones to support.

• Integrate with subscription management software like Chargebee for advanced capabilities like metered billing, coupons/discounts, and subscription portals.

Automating recurring billing through integrated systems gives finance teams superpowers to manage complex subscriber relationships while eliminating tedious manual processes. Reduce churn, maximize lifetime value, and let Xero handle the busywork so you can focus strategically on nurturing customer relationships. That's the formula for subscription success.

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