For many accounting practices, payment conversations are often triggered by problems, rather than planning. Clients tend to wait until cash flow is under pressure, invoices are overdue or onboarding problems have escalated, before asking for help.

Xero already offers the ability for customers to get paid online via GoCardless and Stripe, but now it’s going further with tools designed to turn payments from a reactive process to a proactive advisory conversation.

“We view payments as part of a broader cash flow proposition,” says Peter O’Malley, general manager of product at Xero. “We’re bringing information, workflows and payments into one platform to help small business owners and their advisers see the effects of payments on their business.”

Here are three ways Xero is evolving payments.

1. Predicting cash flow pressure

Xero’s new Cash Flow Actions tool uses smart analytics to detect an upcoming cash shortfall and proposes an optimised bill-payment plan, so a business can protect its cash buffer. O’Malley explains it gives accountants a proactive, data-backed way to advise clients before cash flow becomes a challenge.

“It gives customers and advisers a view of cash flow over the next 90 days, identifies where there’s potential lumpiness and suggests a plan for working around it, so advisers don’t have to piece together what’s about to happen or what could happen.

“Importantly, advisers can use their judgement about things like the most critical suppliers or whether a payment plan makes sense. It brings human judgement into a plan that’s built off a range of signals and patterns.”

2. Help clients get paid without chasing

Late payments remain an ongoing challenge for small businesses, but JAX Payment follow-ups (in beta, coming soon) tackles the problem from the moment an invoice is sent, helping to speed up payments, while minimising the admin of chasing overdue invoices.

“On average, over half of small business invoices are paid late, which is a massive problem,” says O’Malley.

For long-running client or customer relationships, the JAX Payment follow-ups tool looks at factors like how often they pay, the payment methods they generally use and whether they have responded to payment reminders in the past. It then builds a personalised plan and determines the right message to send, at the right time, through the right channel, and triggers those communications at specific intervals.

“Small businesses want to remain in control of the relationship and the communications going out between Xero and their customer,” says O’Malley. “That’s why we use customer history as the foundation for the types of messages we send.

“We can see from our data that if a reminder is sent within about three days of an invoice being due, that’s the optimal time to help a small business get paid. Coupled with the right channel – email or SMS – that increases the likelihood of getting paid within the due date.

“It should also free up accountants’ time to focus on higher-value advisory work, like the right payment terms, the right payment method and the right plans to put in place,” he says.

3. Simplifying bill payments, strengthening control

Between manual data entry, chasing down approvals and logging in to bank portals to make payments, traditional accounts payable processes consume a lot of time for practices. That’s time that could be spent on strategic planning. Which is why Xero has partnered with leading financial platform Airwallex, to provide an embedded bill payments solution that enables customers and their advisers to manage bills, make payments and reconcile transactions all in one place. This helps save time, while providing real-time visibility of cash flow.

“There’s a lot of manual processing involved with bills – capturing documents on the platform and switching between online banking portals or manually entering credit card details to make payments,” says O’Malley. “Xero’s online bill payments reduce that complexity by making payments – even to suppliers that only accept BPAY – without leaving Xero.”

Once a bill has been drafted in Xero, the new bill protection feature adds an extra layer of review before payment. “Powered by JAX, bill protection screens information extracted from a bill and looks at a range of signals and patterns for suspicious signals, and flags anything that needs extra attention – things like a first-time supplier, changed bank details or a bill outside the usual range for that type of payment,” says O’Malley.

“So, in addition to saving time on manual entry, we’re also adding an extra layer of protection,” he adds. “Then, because the payments are triggered from Xero, it gives both the small business and the adviser stronger visibility and transparency around what’s owing and what’s been paid. That visibility can be supported by customisable bill approval workflows, which give small businesses more control over who needs to review and approve a bill before it is paid. Combined with automated bank reconciliation, these capabilities create a more connected accounts payable workflow – helping small businesses not only see what is due, but understand what they need to do next to stay in the black.”

As Xero continues to evolve its payments offering, small business advisers can spend less time on manual, mundane tasks – while still maintaining full control – and more time on value-added services.

“We’re aiming to give advisers a real-time view of what’s happening with their clients,” says O’Malley. “That allows them to have proactive conversations about important issues like an upcoming cash flow crunch, the best method to get paid, and getting the right cash flow buffer in place. Our payments and AI tools help them manage all of these processes.”

Find out more

To learn more about how Xero is evolving payments click here.