Xero Spotlight - Invoices
This month we introduce Xero Spotlight where we take one of the features of Xero and do a deep dive into all the aspects of the feature and how to make the most out of it for your business. This month we focus on Invoices.
Overview
The Invoice feature on Xero allows you to quickly generate an invoice and send it to your customer. It then also provides the status of the invoice, whether it has been sent to the customer if they have seen it and most importantly whether the invoice has been paid. Or if they have partly paid you can see how much of the invoice is due.
Under some circumstances, you can create a draft invoice that will sit under the draft tab, or you may well start the process of creating the invoice but not want to approve it so that you can make any final changes these can be saved under awaiting approval and from here you can then finish the details to send the final invoice out to your customers.
Reminders
Reminders can be set to nudge customers ahead of an invoice being due or if it has become overdue. As a standard, these are turned off, but if you want to save the hassle of manually chasing your customers, invoice reminders can be set up and will send out from Xero directly. When editing these templates make sure not to remove and square brackets as these will pull in data from Xero itself.
REFERENCES
When raising invoices HMRC expects that they are numbered in chronological order. By this, we mean that if you create an invoice on the 1st of June and then create another invoice on the 3rd of June then the earlier date should be invoice 001 and then the later invoice be 002.
So the further back or earlier the invoice the smaller the number should be.
The reference field then allows you to enter your own code.
Quotes
Quotes can be created to provide your customers with an initial cost of the work that they want to be done. You can enter the line details much like an invoice and you can also attach additional files providing more information such as required for the client.
You can use a set template for the quote it will use the standard template that is typically used with the invoices.
Payment services
Payment services provide the option to your customers to pay the Xero invoice online via a secure supplier such as PayPal. This can be used in conjunction with standard invoices where you list your business bank details on the invoice.
To add a payment service add go to your settings page located by clicking the company name in the top left corner. Once on the organisation settings click payment services. Here you can then add the details of your payment service.
You can add the payment service provider to the invoice once you have approved the invoice. You will then see a section “online payments” where you can manage and add the service to the invoice.
Set up payment services with Xero
Credit limits
Should the need arise to limit a customer from owing you money, you have the option to set a credit limit on your customers so that they do not exceed the set amount. Once a credit limit has been set you can then see whether a customer has exceeded the amount when creating new invoices.
There is the option to apply a credit block to customers which will prevent invoices from being sent to them. Instead, invoices will be saved to the draft area and can only be sent once the customer is back under the credit limit amount.
Set a credit limit for a customer
Templates
The templates can be used to customise how your invoices, quotes and customer credit notes, customer statements and purchase orders are displayed and sent to customers. You can have one template or have multiple for different types of services or for the different transactions that are being sent to customers.
The templates can allow you to include logos, bank information for payments, address details and what information is included such as tax columns, tax number, column headings and many more
Item Codes
If you have products or services that can be repeated for each invoice you make this is where item codes may speed up the process of invoice creation. Under the business tab, go to, products and services and create new items. Here you can then put in all the sale details such as your description, costs the sales account associated. You will need to make sure that only the “Sell” option is ticked as this will only associate the details to your invoices.
Once you have created all your item codes these will now start appearing as options in your invoices. Under the item column, you will now see a dropdown menu in which you will be able to pull the information into the draft invoice. If any of the details need to be edited this can be done so on the invoice page and will be specific to that invoice only and you can then update and approve the invoice when completed.