Implementing Xero payments with Pencil Pay

Setting up Xero Payments is easy.

You’ve done all the hard work by winning clients, doing the work and sending them an invoice with your accounting software like Xero. Yet, more than 50% of all invoices are paid late and 4% are not paid at all.

There are many reasons why it is hard to get paid on time by your customers. In the past our customers struggled to get paid too and to their surprise the solution is more often the fact that they don’t ask or remind their customers to pay or provide them with an easy way to pay.

Xero allows your online invoice to be paid regardless of the type of card. We accept credit card payments (Visa and MasterCard, Amex), direct debit and also recurring payments.

You have many options to streamline your payments. The best way is to connect your Xero to Pencil and we will take care of the payments for you. During the 15 second setup, you connect Xero to Pencil and you can even customise and set the Pay Now button on your Xero invoices to something personal like “Click to Pay”.

Once your Xero has been connected to Pencil, all future and existing invoices will have the “Pay Now” button and link to pay.

Often your customers are looking for more ways to pay their invoices, like pay by credit card or pay by direct debit. If they have a larger invoice and want to split the payment over 4 to 6 weeks, for example, they can set up an automated payment plan using Pencil and we’ll take care of the rest; including matching payments and auto reconciling the payments.

Do you receive multiple credit card and direct debit payments each day and have a nightmare reconciling these payments one by one each day? Our auto reconciliation feature built with Xero allows you to take control of your cash flow, you can have hundreds of invoices paid each day and you only have the one daily disbursement to reconcile in one click.

Are your credit card transaction fees starting to mount up? With Pencil, we give you the flexibility to absorb, on charge or even split the transaction fee with your customers. You can set this globally and then adjust specifically on a customer-by-customer basis.

Many of our customer on charge the credit card transaction fees and absorb the direct debit fees. Some do a mix of on charge, absorb and split the transaction fees.

So how do you get started? If you are not already signed up to Pencil, you can try a free trial here.

Now that you have your Pencil account follow these steps:

  1. Log in and go to Integrations → Xero.
  2. Click on the Get Started and follow the steps to connect your Xero account.
  3. Next, set the bank account you want to reconcile the invoices payments into.
  4. Select the “The Pencil Clearing Account”
  5. Select the “Transaction Fee Account”
  6. Select the “Invoice line item account” (we recommend choosing your default sales account)
  7. Select the “Branding Themes” you want to apply the Pay Now link to. Pencil will automatically update this link for you.
  8. You can update the “Custom Payment Service Pay Now Text”, which will allow you to customise the Pay Now button to your name if you want.
  9. The last step of the process it to review your settings and press “Save”.

Now all your existing overdue invoices and any new invoices you create in Xero will have the ability to collect payment via credit card and direct debit.

If you want to make it even easier for your customers to pay automatically on the due date, you can on board them to Pencil by going to Customers → search for your customer → click on the (…) More Actions icon under “Actions” and then click on the Send email button. From here you can select who you want to send the on boarding email to and also set a specific trading term and credit limit; as well as customise the email content that is sent to the customer.

Other features include purchasing a credit report directly from our platform with a flat fee and sending your customer an email to on board through Pencil, they can set the amount of credit they require, select a payment method like credit card or direct debit and agree to your terms and conditions.

If your customers are not able to pay their invoices in full on the due date, Pencil provides a simple to use payment plan offer feature that automates the setting up, on going management and adherence to meeting each payment milestone. Going into a payment plan doesn’t hurt your credit score and helps your customers continue to trade with you.

We are here to help and if you would like us to give you a demo please book one below.