Offering Payment Management Services to Xero Clients

Introduction

In this guide we are going to look at how you might offer services to clients to help them to manage payments in their business. We’ll cover 3 key areas:

• What are your options in terms of service provision

• What is the value proposition around those services

• Which apps can help you and your client and what are the workflows

Services & Value Proposition

There are two clear options for service provision. These are:

• Setup and support

• Full service payment management

Setup and Support

This is best suited to clients who have in-house finance teams or bookkeepers that manage the payment processes on behalf of the business. The business wants to keep these services in-house, but needs a better system to manage the payments.

In this case what you are providing them with is your knowledge of how to implement a workflow that will streamline their payment management process, both for payroll and for supplier payments.

Once you have set up the system you can charge for hand-holding support for the first few pay-runs whilst they get used to the system. This could be charged as a one off fee which you can then tun into a lower monthly support fee.

Full service payment management

This is where you take control of all payments on behalf of the business, including payroll and supplier bills.

To monetise this service you need clients that find payroll/supplier payments frustrating and have no in-house finance staff.

Typical industries where this service is well suited include those where businesses are regularly changing suppliers, and/or have more frequent payment schedules. This could include those in the hospitality, construction, or recruitment industries.

The key benefit you are selling is freeing up time for the director of the business who is currently making all the payments.

Insight from Michael at Telleroo

“The logical way to charge for this is per transaction. Directors keep making mistakes from paying the wrong employee or supplier, to constantly missing payment deadlines (HMRC, NIC, and suppliers). A mistake can be really costly as recouping larger amounts can be difficult and certainly immensely time consuming. This can lead to cash flow issues.

How to charge?

Option 1: Per payment charge + per payment run charge
Option 2 (easier): Let the client pay for bank charges directly and charge a monthly item fee for this (£100-£250 pcm),
Option 3: A % fee from the total volume processed to cover for the risk especially when no approval flows defined.”

Service Design

When you’re managing payments on behalf of a client it’s super important that everyone understands their roles. Using a simple form that is signed off can help with that, so we’ve created a template that you can copy and use.

Workflow

There are three apps that we will cover workflows for. These are Transferwise, Telleroo and CreDec.

We’re going to look at some key areas across each app:

• Types of payments

• Types of services to provide

• Supplier payments

• Payroll payments

• Approval processes

• Funds transfer

• Bank feeds

• Pricing

Payment Types – Supplier Payments & Payroll

The CreDec Xero integration works for supplier payments, plus you can integrate your payroll solution to make payroll payments through CreDec.

Services

You could use CreDec to provide both setup and support services, or full service payment management to clients. This is because CreDec has built in approval processes that facilitate a working relationship between you as the accountant, and the business, without you having access to their bank account.

Supplier Payments – Xero Integration

This page gives an overview of how CreDec works with Xero. Here’s the process in-brief:

Create a payment as normal and use your CreDec Virtual Account as the source, making sure the pay day is in the future:

1. Choose a supplier bill in Xero, or tick off all of the bills you want to pay from the awaiting payment list.

2. Choose the CreDec Virtual Account as the ‘pay from’ account you want the payments to be paid from, with a pay date that is not in the past.

3. Your Xero payment will be fetched by CreDec within minutes;

4. You (or users registered to your CreDec portal) will receive notification to approve and fund the payment;

5. As long as sufficient funding is present in your CreDec Virtual Account on pay date, the payment will be made.

You can also action a spend money payment in Xero with CreDec, just make sure you choose the CreDec Virtual Account and include a reference when recording the spend money transaction.

Payroll Payments

CreDec supports all payroll software file formats (including, Sage, BrightPay, Moneysoft, Star, Xero among others) either with a ‘CreDec’ named file format generated by the payroll application or the software’s default file format. If it’s a provider unknown to CreDec it will offer to support a new format.

Approval processes and controls

Once a payment requested is initiated it will go through an approval process.

Funds Transfer

Following approval CreDec will initiate a transfer of funds from your client’s bank account to the CreDec virtual account, and those funds will be used to  immediately and automatically make payments to the relevant payees.

No funds are ever held within the CreDec virtual account, so cash is always available within your client’s bank account.

As an accountant you never have access to the client’s bank accounts or any CreDec virtual account.

Bank Feeds

CreDec has a Xero bank feed which is seperate from the bill payments integration.

When payments are made via the CreDec virtual account those payments will immediately show in the CreDec Xero bank feed.

Pricing

Payment Types – Supplier Payments & Payroll

The Telleroo Xero integration works for supplier payments, plus you can integrate your payroll solution to make payroll payments through Telleroo.

Services

You could use Telleroo to provide both setup and support services, or full service payment management to clients. This is because Telleroo has built in approval processes that facilitate a working relationship between you as the accountant, and the business, without you having access to their bank account.

Supplier Payments – Xero Integration

This article explains the Xero integration for Bill payments. Here’s the process in-brief:

1. In Xero go to Bills to Pay and select the bills you would like to pay through Telleroo and click Make Payment:

2. Choose the Telleroo account as the ‘pay from’ account you want the payments to be paid from, with a pay date that is not in the past.

3. Payment method choose Mark as paid

4. Select the payment date you would like the pay run to be released from Telleroo. Dates in the future will scheduled the payments for 10am.

5. Once you’ve reviewed the information you’ve entered click Create Payment.

Payroll Payments

Payroll payment data can be pulled directly from:

• Staffology

• Payfitst

Payroll files can be exported from a wide range of payroll software for import into Telleroo. These include:

• BrightPay

• IRIS

• Moneysoft

• paycircle

Approval processes and controls

Once a payment requested is initiated it will go through an approval process. An approver can navigate to the batch they want to approve, then:

• Cancel specific transactions

• Export the pay run

• Cancel the pay run

• Approve the pay run

User roles are configured during the setup, and as an accountant you would never have the role of an approver.

Funds Transfer

It is important to ensure that the Telleroo bank account has sufficient funds to make payments once they have been approved. The Telleroo bank account is meant to be used as a transactional bank account to receive funds directly from customers and keep a balance.

Telleroo bank account funds are safeguarded and held at Clearbank. Telleroo don’t lend or invest deposits at anytime.

Bank Feeds

Telleroo has a Xero bank feed which is seperate from the bill payments integration.

When payments are made via the Telleroo account those payments will immediately show in the Telleroo Xero bank feed. Users have the option to sync 1 line per payment or 1 line per batch. The latter can be useful for confidentiality.

As an accountant you never have access to the client’s bank accounts or the Telleroo bank account.

Pricing

Payment Types – Supplier Payments Only

The Transferwise Xero integration works only for supplier payments.

Services

You should not use Transferwise as a means to provide full service payment management to clients. This is because it does not have built-in approval processes. The Xero integration is aimed at small businesses, rather than for accountants and bookkeepers to manage payments on behalf of their clients.

Transferwise could however be considered as an option for providing setup and support services for payment management.

Supplier Payments – Xero Integration

This video explains how Transferwise works with Xero to make payments on behalf of clients.

Supplier bank details must be entered on the contact information for the client.

You’ll need both a Xero and a TransferWise account to use Pay with TransferWise. If you’re new to TransferWise, we’ll need to verify you and your business first. It can take 4–6 working days to be verified.

It is not possible to schedule advance payments.

Payroll Payments

Payroll files cannot be imported to Transferwise for making payroll payments.

​Approval processes and controls

There are no built-in approval processes which makes Transferwise unsuitable for providing full service payment management to your clients.

Funds Transfer

The exact payment for the batch of transactions must be made to Transferwise from your bank account using the correct reference. Any different amounts will be immediately refunded.

As soon as funds are received Transferwise sends on the individual amounts to your suppliers, and you have the option to send remittance in bulk. All bills will be marked as reconciled and you will only have 1 transaction to bookkeep, being the transfer between your bank and Transferwise.

Bank Feeds

Transferwise has a direct bank feed with Xero, so transactions will appear here as well as in your usual bank account.

Pricing

The cost of the subscription is added to the monthly subscription fee for Xero and would need to be recharged to your client.

If you already have a Transferwise account things may get somewhat confusing here.