From XU Magazine, 
Issue 17

The credit control revolution

One of the jobs that many business owners put off is chasing their debts. It is time consuming and often makes them feel uncomfortable asking people to pay up. They often get a list of excuses as to why it has not been paid and then end up chasing them again in a few weeks time...

As a result of time and the feeling of getting nowhere fast, business owners put the task to the bottom of their to do list. This then has a knock on effect on business cash flow and the accountant asking questions about the recoverability of debts.

The advent of cloud technology has brought huge steps forward in the management of credit control. Through up to date information and clever technology, the process has become much more streamlined, automated and productive. The features both within the accounting packages and also specific apps help businesses take back control of their debtors with positive results on their cash flow.

Easy Invoicing

Keeping your invoicing up to date in Xero is very easy. Through using your customised invoices and saved templates, issuing invoices has become a relatively quick and easy process, without needing to be put off to the end of the month. You can also invoice using your Xero mobile app keeping up to date when you are out and about!

Through emailing your invoices directly from Xero, the customer receives it straight into their inbox so you no longer incur delays and costs of postage.

You also have the ability to set up branding themes for your invoices so you can select the one relevant to the customer you are invoicing. This allows you to customise your invoices to have, for example, different logos on different invoices and to include early payment discounts with certain themes. Through the use of the DOCX custom templates you can create up to 15 branding themes making it possible for businesses to cover a wide range of invoicing options.

Payment Services

The more ways you allow a customer to pay their bill, the more likely it is that they will pay! Therefore the ability to add a payment service to customer invoices opens up the opportunity for a customer to pay you online through a few clicks. This saves you time as you do not need to chase the customer for payment and also eases cash flow as the bill is paid earlier.

Xero payment services available include Stripe and PayPal and you also have apps such as GoCardless to allow easy management of direct debits where these are taken automatically as soon as the invoice due date is reached. It is possible to offer more than one payment solution on the invoice so the customer has a choice and also opens up the option to paying online to a wider audience.

The payment service charges a fee per transaction and to set up a payment service, you must add it to your invoice branding theme. You then select this theme when you prepare the customer’s invoice.

When you email the invoice to the customer, they can view on it online and click the “Pay now” button on the invoice, using one of the payment services available regardless of whether they have a Xero login or not. This fast and easy way has been seen to reduce the time taken for customers to pay. The payment service will take the payment and deposit the money into your bank account.

Advanced Reporting

Through regular invoicing you can keep your sales ledger up to date whilst having the ability to run an aged debtors analysis at any time with ease. The advanced reporting available in Xero allows you to quickly identify customers with outstanding invoices and you can click through to see details of the customer account and where action is required.

The aged receivables report in Xero allows you to select the “as at” date which will report the  outstanding transactions at that specific date.  Where an invoice is paid after this date, it is shown as outstanding in the report but if the report is then run after the payment date, the invoice is no longer listed. This therefore will give the business owner a clear overview of who owes them what at any time.

Reminders

Xero provides you with the ability to send invoice reminders automatically to your customers. These can be sent at a time to suit you and can be before or after the due date of payment. You also select the customers that you want the reminder to be sent to, customising it to your business needs. Xero have created templates with suggested wording for the reminders but you can change these if required and also can add other information such as details about preferred payment solutions and links to the invoice PDF.

It is easy to set up an invoice reminder in Xero and once you do it, you can forget about it as it will automatically take place in the background. You can also easily turn the reminders on and off so you are always in control.

To set up the reminders, this is completed through the Settings section in Xero under Invoice Settings. You just need to have the Adviser or Standard user role in Xero to have the ability to set them up. When you set them up, you have the option to email a customer when an invoice is a certain number of days overdue but this can be changed to meet your business needs. You can select not to chase invoices below a certain value when you set the reminders up and you can also select if you want to include a PDF of the invoice with the reminder.

Xero Approved Debt Management Apps

There are a growing number of apps that link to Xero to manage debt collection for businesses such as Chaser and Fluidly. These apps integrate with Xero and automate credit control, saving you time whilst ensuring you remain in full control of the process. The fact that you do not have to chase all your customers and you do not have to use the same templates for them all means that the business remains in your control at all time.

In addition to automatically sending your email chasers, some of these apps also offer a credit control CRM to automatically log all emails and replies. In addition to this, some apps can provide you data-driven insights into your credit control function, to help understand which customers are good payers, which are bad, and to help you better decide who to grant credit to.

The result of the improved cash collection is enhanced cash flow and the automation of the process also frees up time for the business so it is win win for the business.

Credit control has been revolutionised through the use of cloud software. Online invoicing, automated reminders and up to date ledgers means that the whole debt collection process is much simpler, faster and less painful for business owners. The results speak for themselves with cash flow improved and more time available to dedicate on growing and developing the business.

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