Accounts Payable: Getting a handle on your cash flow with Xero
Are you currently struggling to keep on top of the bills you need to pay – or fed up with paying them all one by one?
If that sounds like you, and you are already using Xero for your business – there is another way!
Whether you’re a small clothing retailer or a nationwide legal firm, everyone has to keep their bills in check.
In this blog, we’re going to show you how to do it using the accounts payable feature in Xero, our favourite cloud-based accounting program.
What is “accounts payable”?
Accounts payable is the term for the money owed by your business to third parties such as your suppliers: AKA – your bills.
By making the most of the Accounts Payable feature within Xero, you can get a clear picture of all accounts payable which are due now, along with your projected cash flow.
What is Xero?
If you aren’t already using it, Xero is a cloud-based accounting software for businesses of varying sizes, which helps you manage:
- bills and expenses
- bank transactions/reconciliation
- payments and invoices
- payroll and GST
- records and inventory
- purchase orders, quotes and estimates
- taxation and
At MKG, we’re big fans of Xero for its flexibility and features — but in this blog post, we’re going to hone in on managing accounts payable.
How can Xero help you handle your cash flow?
Xero lets you manage bills from your suppliers and documents it all in Accounts Payable, a section of your ledger of accounts. By uploading all of your ‘bills to pay’ as they are received, it gives you a clear picture of what you need to pay now, along with your projected business cash flow.
Xero also lets you connect bank accounts and pay and reconcile bills electronically. The best, they can all be in one file – no more uploading all your bills individually!
The final feature we love is Batch Payments. Paying bills one at a time is a recipe for a migraine, so this feature is a game-changer. Batching lets you pay all your bills in a few clicks – and it’s included within all levels of Xero subscriptions.
What’s the process for creating Batch Payments in Xero?
Here is how to give batch payments a try in your Xero account:
- In the Business menu, select Bills to pay.
- Select the Awaiting Payment
- Select the checkboxes of the bills you want to pay.
- Click Batch Payment, then click Pay [number] bills to confirm you want to pay multiple bills at once.
Before you go ahead and pay, check the banking details for your suppliers and add a payee reference to each payment so that the supplier knows what each bill relates to.
- Finally, you can either:
- proceed to the Payment Summary to add the transaction to Xero and pay it separately, or
- continue to your bank and pay directly from Xero (check if your bank allows this – they may also charge an additional transactional cost).
BONUS TIP: If you’d like to pay just part of a bill in Xero, click into the Payment field and edit the amount.
And that’s it – the job is done!
Once your bill payment has been processed, you can easily reconcile it within Xero with the click of a button.
Benefits to your business of Xero accounting
Xero has a clear user interface and all the features you need, whether you struggle with accounts payable or your payroll could use work.
Keeping on top of expense accounts means you’re never caught off guard, and you can plan for a successful financial future. And if you have Xero, you should be using Accounts Payable to help you keep on top of your bills – easily.
Want a hand to get started with Accounts Payable?
Our MKG team can quickly and easily show you how to start using batch payments and making the most of the Accounts Payable feature for your business. You’ll wonder how you ever managed without it!
Make an appointment today with our expert bookkeeper who can demonstrate the process in your own Xero account and help you tailor a simple, step by step process to follow in future. We’ll even provide a recorded instructional video for you to follow while you adapt and learn.
Book in for a call or meeting and we can show you how easy Xero is to use! Get in touch today to find out more.
