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, turning reactive conversations into proactive ones.

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.

Xero is also offering more ways to pay, meaning small businesses can offer their customers different payment options. Its new Pay by Bank via Akahu tool also means customers can easily authorise payments using their mobile banking app, making it even easier for customers to pay how they want and removing friction in the process. This enables small businesses to pay an online invoice by authenticating a one-off bank-to-bank payment in their own banking app, using open banking via Akahu.

“This solves a few problems,” says O’Malley. “It gives the end customer a much more secure and trusted way to pay, with the confidence they’re legitimately paying the correct supplier. It also reduces the risk of data entry errors – such as wrong bank details, wrong amount or wrong reference number – because it all happens automatically. For advisers, Pay by Bank via Akahu helps their clients by enabling faster payment collection, minimising admin and reducing payment friction in one workflow.”

3. Simplifying bills, strengthening control

Building on these features, O’Malley adds there are a number of features to simplify the accounts payable workflow, such as Xero’s bill protection feature that screens information extracted from a bill. This helps to identify 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.

“So, while we’re saving time on manual entry, we’re also adding an extra layer of protection,” he adds. “We couple that with things like customisable bill approval workflows and our automated bank reconciliation to create an end-to-end accounts payable workflow that gives small businesses much more control over their payments and the ability to not just 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, 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 tools help them manage all of these processes.”

Find out more

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