Welcome to the Fit Small Business Xero training course. In this lesson, we're
going to cover how to receive payments in Xero. To follow along with me, log into
your Xero account now, or click the link below this video for a free 30-day trial
of Xero. You can also click this link to access our full Xero course and other
helpful resources. Let's get started. As a business owner, it's very important for
you to keep track of the money that is owed to you: otherwise known as your
accounts receivable balance. One of the ways you can do this is to create and
send customer invoices using Xero. This gives you access to financial statements
that are always up to date. The accounts receivable aging report is one of the
key reports that will help you to track and manage your outstanding invoices.
In this lesson we discuss how to receive customer payments. In the next lesson
we'll show you how to create the A/R aging report and use it to get paid
faster. You can click here to access this lesson. In this lesson we will discuss
three types of customer payments: payment in full, partial payments,
and pre-payments or deposits. When a customer payment is equal to the outstanding
invoices that you have on the books, that is considered payment in full.
If a customer sends a payment in for an amount less than their outstanding
invoices, that is considered a partial payment. Xero also allows your customers
to make payments online. In the How to Set Up Invoices lesson, we showed you how to
link a payment service to your Xero account. You can click here to access
this lesson. Now let's go ahead and record a full or partial customer
payment in Xero. To do this you want to go ahead and navigate to accounts, and
sales, and go ahead and click on the awaiting payments tab here. And so these
are all of our outstanding invoices awaiting payment. And so to select an
invoice you want to simply just click within that row, and then the invoice
will display. If we scroll down to the very bottom of the invoice,
this is where we can see the section on where we can record a payment. The amount
paid field will auto-populate with the total amount due for the invoice. If the
customer payment matches this amount, meaning it's a payment in full, then you
can leave it as is. However if the customers payment is less than the
amount in this field, which means it would be a partial payment, then you want
to go ahead and enter the amount of the customer payment that you received here.
Please note that while this has never happened to me, you may encounter a
situation where a customer sends you a payment that exceeds the outstanding
amount due. Which will be considered an overpayment go ahead and enter the
amount received from the customer, and then you can learn more about How to
Handle Overpayments by clicking the link below this lesson. In the date paid field,
you want to enter the date that you deposited the payment into your bank
account. If you have not made the deposit yet, then enter the date that you plan to
make the deposit with the bank. Please note in order to avoid any issues with
reconciling later on, you need to ensure this date is as accurate as possible.
Paid to: from the drop-down you want to go ahead and select the bank account
that you deposited the payment to. If you have not set up your bank account yet
you must do so before you can record customer payments. Click here to access
this lesson on how to set up bank accounts. The reference field is an
optional field, if the customer pays by check, then you can use it to enter the
check number as we have done in this example. Or you can use it to enter any
information that you would like to include as part of the customer's payment.
Once you've completed all the fields, you can click this add payment button to
record the payment. Once you've added the payment you should see a notification
similar to this one that says that the payment has been received. You can send
your customer a receipt for the payment by clicking on the send
receipt link here. When you select this option, a template will open up for you
to complete in order to send this information to your customer. So let's
talk about this now. In the email template Xero will automatically
populate the send receipt to field with the email address that you saved in the
customer contact details. If you have not set up an email address, or if you would
like to add additional recipients, you can do so directly in this field. Be sure
to separate each email address with a semicolon in-between. Branding theme:
this field will automatically populate with the branding theme or template that you
set up in the How to Set Up Invoices lesson. You can click here to access this lesson.
To select a different branding theme, just select it from the drop-down here.
Email template: this field will automatically populate based on your
email settings. Click the link below to learn more about how to set up your
email settings for your documents that are sent to or from customer and
supplier contacts. Subject: Xero will automatically populate the standard
subject. You can make any changes that you would like to, to personalize the
subject directly in this field. And the message here is also a standard message
that Xero will automatically include. You can easily make changes to present a
more personalized message to your customers by typing directly in this box.
If you select this box next to send me a copy, then you will receive a copy of the
exact email that your customer will receive. Once you're satisfied with the
message and you're ready to send it to your customer, simply click the send
button, and your email along with the PDF attachment of the customers receipt will
be sent. In How to Manually Enter Bank and Credit Card Transactions,
we showed you how to record prepayments received from customers for products or
services that you will provide sometime the future. You can click here to access
this lesson. Let's walk through the steps to apply prepayments to customer
invoices. So return back to the sales area, and then you will see a list of the
categories for your invoices. You want to click on the awaiting payments tab once
again. And then the prepayments will be tagged with the yellow double P. As you
can see here, and we've got a prepayment that was made here. So to select the
prepayment that you'd like to work with you go ahead and just click simply in this
row here, and it will display the prepayment. And then over to the right go
ahead and click on prepayment options and select allocate credit. In this
screen you will see a list of all the open invoices for this particular
customer. In the amount to credit field you want to enter the amount of the
prepayment that you would like to apply to the appropriate invoice. So we've got a
prepayment of $500, so we're going to go ahead and apply that to this actual
invoice number 10010 for $500. So let's go ahead and enter
that amount here. Notice there's a cash refund
option here. If you'd like to refund the deposit back to the customer, you want to
go ahead and select this option. Otherwise, we've got our outstanding
credit balance of $500, total amount that we're applying
500 so remaining credit balance will be Xero after it's been applied to this
invoice. Once you're satisfied with your selections, we can go ahead and click
allocate credit. You should see a notification similar to this one that
says that our credit has been allocated. And notice that we're back on the
prepayment that we first selected. And here at the bottom we've got a less credit to.
So now this credit is showing the invoice that we applied it to,
and as we discussed the remaining credit balance will be 0. So please note that
if you do not want to allocate a credit to the open invoices that are currently
in Xero, you can create an invoice and then return to this screen to allocate
the prepayment accordingly. That wraps up the lesson on how to receive customer
payments in Xero. To access our full Xero course or any of the other lessons in
this series, click this link. You can also find a link below this video for a free
30-day trial of Xero. If you have feedback about this course
or if you have any questions, please leave a comment below. Also,
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