Xero is a cloud-based SaaS accounting software for small business customers located in many countries. The Xero company, founded in 2006, is based in New Zealand. Xero software handles accounts payable like a traditional system that requires manual data entry. For Xero accounts payable automation, Xero customers integrate third-party AP automation software.
How to manage AP in Xero
Manage accounts payable (AP) in Xero performing these necessary processes:
- Receive a supplier invoice or other invoice by email to the Xero accounting system or by scanning
- Approve the invoice
- Programmed payment
- Xero adds invoice/invoice to accounts payable
- Payment made
- Invoice/invoice marked as paid
But keep in mind that these steps that can be done in Xero don't cover many manual tasks. For example, employees in the accounts payable department need to visually determine that bills are correct through manual verification processes and obtaining approvals.
These accuracy verification processes include three-way matching (or two-way matching) of the invoice to the purchase order (PO) and a receiving report, if applicable, for receipt of goods.
AP staff must determine which designated budget administrator(s) should approve the invoice, in accordance with the company's expense policy. Accounts Payable then sends the matching documents (often on paper) to the appropriate approver and follows up with the approvers when their approval is not timely.
Accounts Payable pays invoices in one batch. Perhaps accounts payable still uses old-school paper checks. When using paper checks, these manual steps are required:
- Have the CFO or Controller approve the verification run
- Obtain authorized check signatures
- Print paper checks
- Separate and file a check copy with copies of the matching invoice document.
- Stuff and send envelopes with checks and payment advices attached.
- Respond to incoming vendor calls or emails requesting current payment status.
Xero Accounts Payable Workflows
The following descriptions relate to Xero Accounts Payable workflows for performing Accounts Payable processes in the core Xero Accounts Payable software.
Capture and enter invoices/vendor invoices
Users of Xero Business edition plans, which include early, growing and established SaaS pricing plans, receive the Embedded Hubdoc feature that captures invoices and receipts in Xero. Hubdoc is a Xero OCR data capture partner that extracts data from documents and creates transactions in Xero. The Xero invoices email address is displayed on any status tab on the Purchasing overview page.
To capture invoices and supplier invoices in Xero using the Hubdoc feature, the invoice must be an email attachment rather than embedded in the email itself. For this email capture process, you will forward invoices received from any supplier to your Xero invoice email address.
Most document and image formats work when invoices by email to your Xero organization's unique email address to create a draft invoice with an attached invoice sent by email. You can email up to 10 invoices in a single email, which will create separate invoices in Xero. The maximum email size is 25 MB.
The emailed invoice will be in your company's base currency rather than a foreign currency. Only with a subscription that includes multi-currency, you can manually change the currency of the draft or invoice to the foreign currency in Xero.
Only if Xero can correctly read the emailed invoice, some fields, including these, will be automatically populated and designated in Xero with a lightning bolt icon:
- Contact
- Date
- Total
- Due date
- Reference
Please note that this invoice capture process may not be complete or accurate and still requires performing manual steps (listed in the Xero link for emailing invoices) in the Business/Accounts Payable menu and for currency conversion required.
If you are not using Xero's Hubdoc feature to capture data from emailed invoices, you will need to perform manual data entry to add invoices and invoices in the Xero accounting software system. From the Business/Accounts Payable menu, select New Invoice and enter the field details. Save the invoice and submit it for approval before paying.
You will manually code these accounts payable invoices to the correct expense or asset account, such as inventory.
Pay bills and record payments
TO pay bills, schedule invoices into the system (in batches) by entering the payment date and applying a check mark to invoices that are paid. When the invoice is paid, Xero records the transaction as a reduction to accounts payable as a debit and a double-entry accounting balance in cash (and any early payment discount applied).
Add new suppliers
In Xero accounting software, Xero sets new suppliers as contacts and determines how you use these Contacts, whether as Suppliers or Customers, or both. If you upload an invoice, the Contact is used as the supplier. Therefore, it is not necessary to move Contacts to Suppliers. When you use Hubdoc in Xero, Hubdoc automatically set up supplier in Xero accounting software system for you when the invoice is received. Otherwise, manual data entry is required to set up suppliers in Xero.
Manage expenses and reimbursements
With Xero, you can view and manage invoices, expenses and reimbursements from the cloud-based online software or with a mobile device using the Xero app. Your visibility into expense management will not be as complete as it would be with the integration of accounts payable automation software.
Automating Xero AP Workflow with Nanonets
You can fully automate Xero's entire AP workflow for invoice receipt and processing, including payments, with Nanonets Flow, your AP automation and invoice processing software for accounts payable. Uses of nanonetworks accounts payable best practices in your AP automation software.
Nanonetworks help you achieve supplier incorporation easily and have excellent document management related to accounts payable. Suppliers choose a payment method.
Nanonets Flow AP automation software allows you to forward emails or scan invoices to Nanonets with ai/ML-enhanced intelligent OCR (Optical Character Recognition) to capture invoice data electronically by line item with headers. But Nanonets is an OCR expert and has a much higher accuracy rate in capturing invoice data than Xero with HubDocs can reliably provide for each invoice. Nanonetworks ai data entry It is the key to unlocking precision and efficiency.
Nanonets provides your business with timely and contactless invoice processing, without human intervention or manual processes, powered by artificial intelligence (ai) and its subset, machine learning (ML). Automated software invoice processing includes steps to verify invoices, invoice comparisonapprove invoices for payment and pay approved invoices and invoices in batches.
You will be able to claim early payment discounts from the supplier when you pay within the short number of days indicated in the payment terms of your invoice, such as paying within 10 days for 2/10, net 30 to receive a discount of 10% of the balance owed on the invoice. instead of paying the full invoice amount in 30 days. When you receive early payment discounts on trade creditors For inventory items, the cost savings are impressive.
With Nanonets, after capturing invoice data, Nanonets verifies the invoices and account coding and syncs that data with your accounting system. Nanonets compares invoices with supporting documents, including purchase orders (PO) and goods receipts when applicable.
Your company can set up invoice approvers and spending limits that comply with your company policy or let ai take care of it. invoice approval workflows automatically for you within Nanonets if you prefer. Approvers have the option to Reject or Approve invoices for payment.
Schedule and make global electronic payments in a variety of currencies using large, efficient batches with Nanonets. Nanonets will then reconcile and match internal records, transactions or payments with bank accounts, credit card statements or other sources to account reconciliation.
Nanonets gives your business team intelligent views with business spend visibility, giving you more control to manage business costs.
Conclusion
Xero accounts payable workflows are time consuming. When your company starts streamlining workflows with Xero + AP Automation, accounts payable staff won't need to perform these repetitive manual data entry steps for every vendor, invoice, or employee expense report that requires reimbursement.
Find out how Flow through nanonetworks can supercharge Xero accounts payable automation workflows and provide greater financial accuracy and controls.
