Handling payments efficiently is a struggle for many small businesses using Xero.
By setting up compatible payment services and leveraging Xero's tools for bank reconciliation, you can dramatically improve transaction processing.
In this post, you'll learn step-by-step how to configure online payments, automate reconciliation, and tap into Xero's support resources for payment issues.
Introduction to Efficient Transaction Handling in Xero
Xero is an online accounting software that allows businesses to streamline payment processing and bank reconciliation. By integrating with payment services like Stripe and GoCardless, Xero provides automated tools to simplify transaction handling.
Understanding Online Invoicing and Payments in Xero
Xero enables users to create professional online invoices and accept payments directly through the software. This eliminates the need for manual payment collection and reconciliation. Key benefits include:
- Online invoicing allows customers to easily pay outstanding bills through credit card, ACH transfer or other methods
- Payments are matched to invoices automatically, saving accounting time on manual reconciliation
- Customers can conveniently access and pay invoices online through secure payment portals
By streamlining payment collection and reconciliation, Xero improves cash flow for businesses.
Benefits of Automated Bank Reconciliation in Xero
Xero automatically matches transactions from connected bank accounts to related invoices and bills. This eliminates many manual reconciliation tasks:
- Incoming payments are matched to open customer invoices
- Outgoing bills are reconciled with bank payment records
- Unmatched transactions are flagged for easy identification
Automated reconciliation provides real-time visibility into cash flow. This helps businesses better understand their financial position.
Overview of Payment Services Compatible with Xero
To enable online payments in Xero, users must connect an online payment service like Stripe or GoCardless. Integrating these services allows Xero customers to easily pay online invoices.
Key features available from integrated payment services include:
- Accept credit card and ACH payments from Xero invoices
- Seamlessly reconcile payments with bank account transactions
- Customize online checkout experiences for customers
- Analyze payment histories and transaction fees
Choosing the right payment service for a business's needs is critical for efficient transaction handling in Xero.
By leveraging Xero's automated accounting tools and integrated payment services, businesses can simplify payment processing and reconciliation. This saves significant time on manual tasks while improving cash flow visibility.
Does Xero do payment processing?
Xero offers integrated payment processing through partnerships with payment service providers like Stripe and GoCardless. This allows businesses to easily accept online payments from customers directly within Xero.
Some key benefits of using Xero's payment processing include:
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Convenience: Customers can pay invoices directly through links on Xero invoices. This saves time over manually collecting payments.
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Increased likelihood of on-time payment: Giving customers more payment options makes it easier for them to pay on time. This improves cash flow for the business.
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Bank reconciliation: Payments automatically reconcile with bank feeds in Xero. This eliminates manual reconciliation work.
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Works with Xero invoicing: Send payment links along with Xero online invoices. Accept payments against specific invoices in one integrated system.
To set up payment processing in Xero:
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Sign up for a Stripe or GoCardless account from within Xero. This links the accounts.
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Configure payment services and bank accounts in Xero.
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Enable online invoice payment when creating or sending invoices. This adds pay now links customers can use.
With a few quick steps, Xero accounting software can be set up to process customer invoice payments directly. This saves significant time over collecting and reconciling payments manually.
How do I process a payment on account in Xero?
To enable payments to an account in Xero:
- Go to the Accounting menu and select Advanced, then click Chart of accounts.
- Click on the account you want to enable payments for to open its details.
- Select "Enable payments to this account".
- Click Save.
By enabling payments to a specific account in your Xero chart of accounts, you allow transactions to be processed directly to that account. This is useful if you want to set up an account dedicated to receiving online payments or automatic bank feeds.
For example, you could create a "Payment Services" account and enable it to accept Stripe or GoCardless transactions. When customers pay invoices via one of those connected payment services, the payments will automatically be recorded into that account.
Enabling payments per account gives you separation within Xero, allowing easier reconciliation since all online payments will be grouped. If you process a lot of transactions, it keeps everything organized.
When setting up Stripe or GoCardless with Xero, you will still need to connect them and go through an authorization process. Enabling payments on an account is an additional step to direct where those connected payments should be posted.
So in summary:
- Enable payments per account to control where online payments are recorded
- Useful for reconciling and tracking payment services like Stripe
- Set up payment services separately first, then choose the account
- Keeps different payment types organized in their own accounts
How to do progress payments in Xero?
To set up progress payments in Xero, follow these steps:
1. Select the Financial tab and click "New Progress Invoice"
This will open up the progress invoice creation screen.
2. Under Options, select the Invoice Type
You can choose "For progress amount / deposit" to enter a specific payment amount or "% of the quoted value" to invoice a percentage of the total quoted amount.
3. Enter the Payment Amount or Percentage
If you selected "For progress amount / deposit", enter the specific dollar amount to invoice. If you chose "% of the quoted value", enter the percentage (e.g. 25%) of the total quote you want to invoice for.
4. Add a Description
Enter a brief description of what the progress payment is for, such as "Website Design - Phase 1 Completion".
5. Save the Progress Invoice
Review the details and click "Save". This will generate the progress invoice to send to your customer.
Following these steps allows you to easily create progress invoices in Xero to bill your customers incrementally as projects are completed. The progress payments will show on their own sub-tab under Accounts Receivable for easy tracking.
How to do a transaction payment in Xero?
To enter a transaction payment in Xero, follow these steps:
- Click the "Add" icon in the Bank Accounts section of Xero
- Select the bank account that the money was spent from, then click "Next"
- Enter the name of the contact or supplier you are paying
- Select the date that the money was spent
- Enter the details of the transaction into the "Spend Money" fields:
- Description: Enter what the payment was for
- Account: Select the appropriate expense account
- Tax rate: Choose the applicable tax rate
- Amount: Enter the total amount spent, including tax
- Reference: Add any reference number or additional details (optional)
Once all details are entered, click "OK" to record the spend money transaction. Xero will automatically calculate and display the tax amount based on the total amount and tax rate entered.
Recording transactions this way allows you to accurately track expenses and payments made from your connected bank accounts. The transactions will match up when reconciling your accounts.
Key Takeaways
- Click "Add" and select the bank account used to make the payment
- Enter the supplier name, date, account, tax rate and amount details
- Add a reference or description for your records
- Review and click "OK" to complete the spend money transaction
Following these steps ensures your Xero accounting and reporting remains up to date when processing payments. Letting Xero handle the calculations streamlines transaction data entry.
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Set Up Online Payments with Xero
Integrating online payment processing can streamline invoicing and transaction handling within Xero. This guide covers key considerations and step-by-step instructions for setting up Stripe or GoCardless as your payment service.
Choosing Between Stripe and GoCardless
When deciding on a payment service for Xero, consider:
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Features: Stripe offers extensive payment options while GoCardless specializes in bank payments like ACH and BECS.
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Pricing: Stripe charges per transaction while GoCardless has a monthly fee. Volume discounts available.
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Use Cases: Stripe suits ecommerce businesses accepting cards. GoCardless best for recurring bank payments.
Evaluate your business needs to determine the best fit. Both integrate seamlessly with Xero.
Set Up Stripe as a Payment Service in Xero
Follow these steps to connect Stripe and accept payments in Xero:
- Navigate to Settings > Payment Services
- Click Connect Stripe
- Log into your Stripe account or create one
- Select Stripe settings like which currency and bank account to use
- Activate Stripe payment processing
You can now accept card payments and manage transactions in Xero.
Set Up GoCardless as a Payment Service in Xero
To enable GoCardless as your payment processor:
- Go to Settings > Payment services
- Click Set up GoCardless
- Input your GoCardless access token
- Select payout settings and activate GoCardless
Bank payments will now flow directly into Xero for reconciliation.
Configuring Payment Service Settings
Customize options when setting up your payment service:
- Payment account - designate bank account for deposits
- Invoice defaults - set payment terms
- Branding - add logo to customer invoices
- Notifications - email alerts for payments
Optimizing these settings ensures smooth payment processing within Xero accounting.
Accepting Online Payments Through Xero
Explain how to create payment links, customize the checkout experience, and manage transactions once a payment service is activated.
Creating Online Invoices with Payment Links
Xero allows users to easily generate online payment links for invoices. Here are some key features for creating and customizing invoice payment links in Xero:
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Navigate to the invoice you wish to create a payment link for and click "Send Payment Link". This will generate a unique URL for that invoice.
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Customize the payment link by adding your logo, adjusting colors to match branding, and adding custom messages for the customer.
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Set payment reminders to automatically resend the link if unpaid after a certain number of days. This helps reduce late payments.
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Accept payments through credit card, PayPal, bank transfer or other methods by connecting Xero to payment services like Stripe or GoCardless.
Overall, Xero makes online invoicing simple through customizable payment links attached directly to invoices. This facilitates fast and convenient payments from customers.
Customizing the Online Payment Experience
Xero offers extensive configuration options when setting up customized payment links, including:
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Checkout Fields: Choose which fields to include (name, address, etc.) or turn fields off completely for a minimalist checkout form.
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Branding: Upload logo, adjust colors/fonts to match company branding so payments feel seamless.
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Emails: Customize payment communication with custom subjects and messages when links are sent or payments processed.
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Payment Services: Select payment providers like Stripe or PayPal and map data to work together smoothly during checkout.
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Refunds: Enable self-service refunds or manually approve/deny refund requests.
With robust preferences, Xero payment links can capture information and provide an experience aligned with your business needs for accepting funds online.
Transaction Handling: Monitoring Payments and Refunds
Xero includes a Payments section to track completed and pending transactions:
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View payment history including associated invoices, customer details, fees, and status.
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Scan the payments dashboard for top-level overview of payments by time period.
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Manage refunds issued through Xero payment links. Approve or deny refund requests.
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Reconcile payments from Stripe, PayPal etc. using Xero's bank reconciliation.
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Leverage reporting to analyze payment volume, reconciliation status, and performance over time.
With centralized payments tracking, users can monitor transactions, issues refunds, and gain insights.
Ensuring Secure Payment Processing
Xero utilizes industry standard encryption, tokenization, and fraud detection to enable safe payment processing:
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SSL Encryption secures payment details entered by customers.
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Tokenization substitutes sensitive card data with unique tokens to prevent exposure.
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Fraud Analysis screens transactions for suspicious indicators in real-time.
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PCI Compliance adheres to strict data security regulations around handling cards.
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Partners use certified payment processors like Stripe with additional security layers built-in.
You can feel confident collecting payments through Xero knowing financial data remains protected. Reach out for any questions on security or getting set up with online payments!
Automating Bank Reconciliation with Xero
Integrating payment services like Stripe or GoCardless with Xero can help automate the bank reconciliation process. Here's how it works and some tips for smooth reconciliation.
The Role of Bank Feeds in Reconciliation
Xero uses bank feeds to automatically import new transactions from connected bank accounts. This allows much of the reconciliation to happen automatically behind the scenes. However, it's still important to regularly review transactions to match expenses or deposits to invoices.
Matching Transactions: A Step-by-Step Guide
When reviewing a connected bank account in Xero, follow these steps to match transactions:
- Identify any imported transactions that are "Unreconciled"
- Select an unreconciled deposit/payment and find the matching invoice(s) in Xero by searching the reference number or amount
- Choose "Reconcile" to match that transaction to the related invoice(s)
- Repeat for each unreconciled transaction
Reconciling regularly makes bank reconciliation almost effortless.
Troubleshooting Reconciliation Issues
Here are some common reconciliation problems and fixes:
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Unmatched deposits - Search invoice reference numbers or amounts to find potential matches. These may be customer overpayments or deposits without references.
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Duplicate imported transactions - Identify and delete any duplicated imported transactions.
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Incorrect or missing amounts - For small discrepancies, create manual journal adjustments. For larger issues, confirm accurate bank statement details with your financial institution.
Best Practices for Timely Reconciliation
Follow these tips for smooth, regular bank reconciliation:
- Reconcile at least weekly for real-time financial awareness
- Set calendar reminders to prompt reconciliation
- Enable automatic bank feed imports for hands-off transaction matching
- Review and match transactions daily to prevent backlogs
Automating reconciliation processes with Xero bank feeds and integrated payment services like Stripe or GoCardless improves financial oversight and saves significant time.
Leveraging Xero Support for Payment Processing Issues
Xero offers robust customer support resources to help troubleshoot any issues related to processing payments and transaction handling within the software. Their help center, direct assistance channels, community forums, and regular feature updates empower users to efficiently manage payments.
Navigating Xero's Help Center
Xero's help center contains an extensive library of support articles, guides, and tutorials that provide step-by-step instructions for setting up and managing payments. Some key resources include:
- How to connect Stripe or other payment services to Xero
- Configuring payment reminders and automated invoice chasing
- Setting up online invoicing and integrating with payment gateways
- Bank reconciliation and resolving unmatched transactions
- Reporting on cash flow, account receivables, and payment history
The search functionality and clear category structure make it easy to quickly find answers to specific payment processing questions.
Contacting Xero Support for Direct Assistance
For personalized support, Xero offers 24/7 phone and live chat options to speak directly with a customer service representative. Support agents can provide tailored troubleshooting and advice for payment issues such as:
- Investigating failed or disputed transactions
- Granting payment refunds to customers
- Adjusting automated payment settings
- Reconciling incorrect bank imports
Support reps can also escalate complex technical issues to a specialized payments team for additional insight.
Community Forums and Peer Support
Xero hosts community forums where users can post questions and engage in discussions with other customers and experts. The payments and billing forum features threads on topics like:
- Recommendations for payment services integrations
- Sharing workflows for streamlining payment processing
- Discussing new features and capabilities
Connecting with peers provides an opportunity to learn from others grappling with similar payment scenarios.
Staying Updated with Xero's Payment Features
Xero continually enhances its payment-related tools and reporting based on customer feedback. Users can stay updated through:
- Release notes and update emails highlighting new features
- Webinars and events previewing upcoming capabilities
- Early adopter programs to pilot new innovations
Proactively learning about the latest developments enables users to maximize value from Xero's payment offerings.
By fully utilizing Xero's available resources for troubleshooting, assistance, peer connections, and feature discoveries, users can optimize payment processing efficiency.
Conclusion: Streamlining Payment Processes in Xero
Recapping the Benefits of Xero for Payment Processing
Xero provides a streamlined solution for accepting and reconciling payments by integrating with leading payment services like Stripe and GoCardless. Key benefits include:
- Seamless integration that automatically syncs payment data with Xero accounting
- Ability to accept one-off and recurring payments from customers
- Bank feed reconciliation to match payments with invoices
- Detailed reporting on payment transaction history
By leveraging Xero's payment integrations, businesses can simplify payment collection, reduce manual work, and gain greater visibility into cash flow.
Next Steps After Setting Up Payment Services
Once Stripe, GoCardless or another payment service is connected to a Xero account, businesses should take these next steps:
- Set up online invoicing in Xero to easily share payment links with customers
- Configure automated payment reminders for overdue invoices
- Review default reconciliation settings and customize as needed
- Run payment reports to monitor transaction volumes and fees
Optimizing these settings ensures efficient payment processing and full utilization of Xero's financial management capabilities.
Further Resources for Xero Users
Xero offers an extensive knowledge base and active user community forums to help businesses get the most out of its software. Key resources include:
- Xero Central - Training courses, webinars, and certification programs
- Xero Blog - Product updates, accounting advice and business insights
- Xero Community - Discuss best practices with fellow Xero users
Investing time into learning the details of Xero's payment and reconciliation functionalities will ensure accounting processes are efficient, scalable, and positioned for growth.
