Batch payments in Xero, one transaction not twenty
Count the payments leaving your bank account on a normal week. If each supplier bill is its own transaction, each one its own trip through online banking, you are doing twenty jobs where Xero will do one.
Watch Batch Payments on YouTube, 2 min 35 sec
- Xero bundles selected bills into a single payment transaction and exports one ABA file for your bank
- Supplier bank details have to be on the contact record first, with the BSB and account number entered without spaces
- The reference the supplier sees comes from the contact record, so put the account number there and the invoice number on the batch
- You can print or send a batch summary when a second person has to authorise the payment
- One transaction in the bank means one line to reconcile instead of twenty
Why batch at all
The question in the video is the whole argument. Why pay your bills one by one when you can bundle them into one payment transaction, export the file, and upload it to your online banking once?
The bank then processes the file and pays every bill in the batch. What arrives back in your bank feed is a single transaction, which is also one line to reconcile rather than twenty. If reconciliation is where your month goes, this is one of the few changes that removes work from both ends at once.
Get the supplier details in first
Nothing works until the supplier's bank details are on their contact record in Xero, and this is where most batches fail on the first attempt.
- Open the supplier's contact record and find the bank account fields.
- Enter the BSB and the account number without any spaces.
- Enter the bank account name.
- Put the account or customer number in the details field, because that is the reference the supplier will see.
On the reference. The details you store on the contact record appear on the batch payment. Use that field for the account or customer number the supplier identifies you by. If you reference payments by invoice number instead, leave it and enter the reference when you prepare the batch, which is the point where you know which invoice you are paying.
Preparing the batch
- Go to Purchases and open the bills awaiting payment.
- Tick the bills you want to pay together.
- Use the Make payment button above the list to prepare one batch payment.
- Check each line has bank details. If one is missing you can enter it there rather than starting again.
- Enter the reference details, the invoice or customer number, per line.
- Choose the payment date and the bank account it goes out of.
- Make the payment.
If a supplier's bank details are missing, Xero lets you enter them as you go. You do not have to abandon the batch and start again.
Choosing the bills. You can add a date to each bill for when you want to pay it, and that batches them together. Or just choose the bills for the current batch.
Exporting and paying
Once the payment is made, export the batch file. In Australia that is an ABA file, which is the format the banks accept for bulk payments.
Log into your online banking, import the file, and authorise it if your bank requires that. From your side the work is finished: one file, one authorisation, every supplier paid.
If someone else has to approve it. Xero produces a batch payment summary as a PDF, so you can print it or send it on for a second person to authorise before the file goes anywhere near the bank.
The reconciliation is the point
A batch is not really about saving clicks in Xero. It is about what the bank feed looks like afterwards. One transaction, matched against one batch, instead of twenty payments to find homes for.
If your bank reconciliation is out, everything is out, so anything that reduces the number of lines you have to explain is worth doing. There is a longer walk through how to reconcile in Xero. If payments and bills are where your week goes, we will look at your purchases workflow with you. If you would rather learn it on your own file, there is a session on bank reconciliation, purchases and invoicing.
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