Pay your suppliers with Xero

Entering your purchase bills into Xero, rather than just entering your sales invoices, helps you to paint a complete picture of your finances.

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Entering your purchase bills into Xero, rather than just entering your sales invoices, helps you to paint a complete picture of your finances.

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Being able to see what you need to pay and when, means you can better predict and plan around your cash flow.

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As the number of bills you enter grows, you'll start to identify what expenses are costing you the most.

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On top of that, entering bills into Xero means it's easy to say on top of paying the bills, you'll know when they're due and the bill status will tell you if they've been paid or not.

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So there's no risk of forgetting to pay a bill on time or missing a bill payment altogether.

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Paying the bills is quick and painless too, thanks to batch payments, which allow you to bundle multiple bills into one payment file.

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Let's take a look. To get started, head over to the purchases overview page by clicking on business and then purchases overview.

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As the name indicates, this page provides a fantastic overview of your purchases.

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At a quick glance, you can see a total for bills in draft, bills that are awaiting approval, bills awaiting payment, and those that are overdue.

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And likewise the status of your purchase orders too. You'll also see a visual representation of when you can expect money to go out and this will be based on the due date of your bills.

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There will also be an expandable range and an interactive bar graph. There will also be a search function allowing you to find bills or purchase orders that have already been entered into Xero.

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From this page, click plus new to raise a new bill. For starters, enter your supplier's name.

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You can select from your existing list of contacts or you can enter a new contact on the fly.

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The bill date defaults to today's date, but this can be overridden.

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Make sure the due date you enter aligns with the due date on the bill.

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You can use the calendar to select the date or you can use our date entry shortcuts.

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For example, enter plus seven to make the due date seven days after the bill date.

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Or if you wanted the due date to be on the 20th of the following month, you'd enter asterisk 20.

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There are heaps of other useful date entry shortcuts which can be found on our supercharged help center Xero Central.

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Input the bill number into the reference field if you have one.

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The item column is where we select a product or service from our list of saved products and services.

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If you're frequently purchasing the same product or service, save them as an item in Xero so that way you don't have to key in the information every time you create a bill.

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As you can see, if I select an item from the list, all the fields populate for me automatically, thereby saving time.

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If the item you're purchasing isn't a saved product or service, simply fill in the fields yourself.

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You would be required to select an account from your chart of accounts.

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Choosing an account is essentially categorizing the transaction. Which account you select will depend on what the bill is for.

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Xero provides a number of default accounts for you. When you choose an account and approve the bill, this will update your financial reports in real time.

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A few examples of commonly used expense accounts are motor vehicle expenses, printing and stationary, repairs and maintenance, freight and courier, insurance, and so on.

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If you're entering a unit price that's inclusive of tax, make sure you choose tax inclusive next to amounts R.

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If you're entering a unit price that's exclusive of tax, make sure you choose tax exclusive in the same box.

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The option you choose will depend on how your supplier has formatted the bill.

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To check that it's correct, make sure the total in Xero matches the total on the bill you received.

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We're now ready to complete the bill. I have the option to approve as I have the appropriate user role, however other users may only be able to submit it for approval.

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Clicking the paper symbol allows you to upload a document to be stored alongside the bill.

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In this case, I'd suggest attaching a copy of the bill you received from your supplier.

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There is however, an easier way to get a copy of your bills into Xero.

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This feature is called email to bills. Email to bills allows you to email PDF bills straight into your Xero organization, at which point Xero will create a draft bill for you.

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To use this feature, go to business, and then bills to pay.

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Each Xero organization has its own unique bill's email address. If you click create bill from email, you'll be able to access yours.

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Simply click the email address to copy it to your clipboard.

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Now I'm going to jump into my emails, and from here I'll forward a bill to that email address.

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If we jump back into Xero now, we can see that a draft bill has appeared.

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You can see that the PDF sits side by side, which makes data entry a breeze.

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This paper symbol with the one next to it, tells us that the PDF document is attached to the Xero bill.

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A very quick and easy filing system. All I need to do is copy much of the detail across, fill in the relevant fields, and approve.

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To save even more time, add your unique bill's email address as a contact in your email account, so you can easily forward bills you receive into Xero.

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Better yet, if you frequently receive bills from the same contact, such as those monthly utility bills, set up an auto forward rule in your email account, so that way it's automatically forwarded for you.

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Now that we've covered entering bills, let's move on to paying them.

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Rather than paying your bills one by one in internet banking, batch payments allow you to bundle multiple bills into one payment file, which you can then import into online banking.

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To use this, go to business, bills to pay, and then through to the awaiting payment tab to view the unpaid bills in Xero.

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You'll notice that I've scheduled to pay a number of these bills on the 20th of July.

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If you want to schedule your planned payments to better manage your cash flow, then you can use the schedule payments link.

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Once I click into this list, I can use the top checkbox to select all of these bills in bulk.

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I'll then use the batch payment link to take me through to a screen where I can enter my payment details.

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To save time on data entry, be sure to save your supplier's bank account details in the contact section of Xero.

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When you're happy with what has been entered, select make payments.

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This has recorded the payment in Xero only, but if you wanted to transfer the funds to your suppliers, then click the link to download the batch payment file to your computer.

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Once done, you'd log into your bank account in online banking, and then import the file.

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You would not be required to enter any information whatsoever within your bank account, as all of the information is included in the batch payment file.

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If you'd like to learn more about recording purchases and paying bills in Xero, click the question mark icon at the top, and select the link to access our supercharged help centre, Xero Central.