Xero allows you to send clients quotes, invoices, credit notes and statements quickly and easily.
Having your sales invoices and customer info in one place allows you to track outstanding invoices and slow paying customers at a glance.
Not only that, but Xero allows you to email invoices directly to clients and enables clients to pay via credit card or PayPal.
Let’s see how it works.
From the Dashboard, click Accounts, then Sales.
On this screen you can see how much money you are owed, keep track of aged payables and see which customers owe you the most money.
If you click New, you have the option of creating an invoice, a repeating invoice, a credit note or a quote. For now we will look at creating an invoice.
For each invoice, you must assign a customer (To). If this is an existing customer, you can select this with Auto Fill by starting to type out the name. If it is a new customer, you will get the opportunity to add customer details after saving the invoice.
For date, you can type in several formats and Xero will automatically bring up the correct date. For example, if today is 23 January 2016, you could leave the box blank and it would default to today’s date, you could type 23 and it would default to January, or you could type 23 Jan, Jan 23, 23 1, etc. Just make sure if you are entering old invoices that you type in the correct year, as Xero will default to the current year.
You can then select the due date and assign an invoice number. Xero adds one to the previous invoice created, but you can change the invoice number to suit your business needs.
You can select the currency if your Xero plan allows different currencies. We will talk about different currencies in another blog post, but obviously if you are trading in different currencies, this is a crucial feature for you.
Xero also allows you to set up items within your invoice. This is great for two possible functions. First, if you have regular repeating transactions you can save time by clicking on the item and the rest of the details will automatically come up. Second, Items allows you to track inventory. Again, we will cover Inventory on another blog, as the Inventory feature in Xero is too advanced to cover in one paragraph!
You can select whether the invoice is GST exclusive or inclusive and can set the tax rate on each item on the invoice. Once saved, the GST information will be included in your GST report within Xero – another feature we will cover in another blog.
You need to assign an account to the invoice. Xero has several default accounts (the most commonly used for most companies would be Sales) but you can add new accounts for recording different sales types. This could be anything that suits your business needs – consultancy, delivery, installation, service charge – which allows more in depth reporting. To create a new account heading, go to Settings – Chart of Account.
You can add more lines to the invoice, allowing itemised invoicing. For each line you can change the accounts, add a description and select the applicable tax rate.
Finally, you can select different regions if you have set this up within Settings. This allows income (and expenses) to be allocated to different areas of your business. This could be a branch or department, for example.
Once your invoice is completed, it can be saved as a draft to be reviewed by a manager/accountant or it can be approved straight away. Once saved, it can be emailed to the client by clicking ‘Email’. This sends the invoice along with a standard message, which you can customise. The customer then has the option of printing or saving the invoice as a PDF or CSV.
If your client also uses Xero, they can save the invoice into Xero, where it will appear as a draft bill. Likewise, you can save invoices received from suppliers who are on Xero.
Once the client receives the email, they can click ‘Pay Now’ and can pay directly by credit card or PayPal.
You can see if the invoice has been sent and whether it has been received by the client. Using this in collaboration with bank feeds and keeping up to date with reconciliations, you can therefore have an up to date record of when invoices are paid, what is still outstanding and how much each customer owes at any time, just by clicking on the Sales Dashboard.
To set up online payments, go to Settings – General Settings – Invoice Settings. Click on Payment Services to set up how you want to be paid by your clients.
In Invoice Settings, you can also create Invoice Templates. This allows you to create different templates for different clients or sales types and to add your logo, branding and formats to the invoices you send your clients.
Now you have an idea of some of the benefits of using Xero for your invoicing, why not get in touch and arrange a consultation?