Getting paid faster with Xero, without having to chase anybody

If your customers pay on time, skip this

Plenty of businesses have a debtors ledger that behaves itself. If yours does, none of this is urgent and you can get back to work.

This page is for the other situation: the ledger you do not really want to open, the customer who is always a fortnight over, the month where the work was good and the bank account did not show it.

The problem is not your payment terms

Across Xero’s Australian data for the June 2026 quarter, small businesses were paid in an average of 22.9 days, and an average of 6.0 days late. Xero notes that quarter was flattered by end of financial year seasonality and the figures may be revised, so read it as a direction rather than a fact.

The useful part is the gap between the two numbers. Your customers are not ignoring your terms because the terms are too long. They are drifting by about a week because nothing reminds them, and because paying you requires them to go and do something.

Three things to change in your file this week

None of that costs anything. It is an hour in your Xero file and it works on customers you already have.

Which payment option actually costs what

Adding a Pay Now button is the other half of removing the effort. The question is which one, and the answer depends far more on the size of your invoices than on the brand.

Here is the same $10,000 progress claim, paid three ways.

The figure that catches people is GoCardless. Its cap is advertised at $4, and that holds right up to $3,000, above which an extra 0.3% applies with no ceiling. Pinch’s cap holds all the way up. On one large invoice that difference is worth more than a month of software.

Two warnings on reading any published rate. GoCardless quotes its fees excluding GST and Stripe quotes them including, so comparing the headline numbers side by side is wrong by ten per cent. And the Xero App Store still lists Stripe at 1.75%, a rate Stripe cut in April 2024. Check the provider’s own pricing page rather than the tile in the app store.

Does a Pay Now button really get you paid twice as fast?

Xero says businesses using Stripe or GoCardless get paid up to twice as fast. We went and read the footnote, because it is a big claim.

The comparison is between invoices that had a payment service and were sent by text message, against invoices with neither. It moves two things at once, so it cannot tell you how much came from the button and how much came from texting the invoice instead of emailing it.

Which is still useful, just not the way it is presented. If your customers do not open email, and a lot of trade customers do not, the text message may be doing most of the work. That one is free to try before you change anything else.

Where the merchant fee goes in your accounts

This is the part that sends people to us, usually after an afternoon of trying to make a bank feed balance.

You would expect a $1,000 invoice paid by card to show $982.70 received and $17.30 still owing. It does not work that way. Xero marks the invoice paid in full at the gross amount, creates a separate transaction for the fee against a merchant fees expense account, then groups the payments and the fees together so the net deposit from the provider reconciles in one go.

Three things follow, and all three cost money when they go wrong.

• Your income is the gross, not what landed in the bank. The fee is a deductible expense, not a reduction in sales. Treating it as a reduction understates your turnover, which matters anywhere a threshold is tested against turnover.
• The GST on the fee has to be right. Stripe’s Australian fees are quoted including GST and GoCardless quotes excluding. If the fee transaction is coded wrong your BAS drifts by a small amount every single month.
• It only reconciles itself for payments taken through the Xero link. A card machine on site, or a payment link sent from Stripe directly, does not group and has to be matched by hand. This is the single most common reason a feed will not balance.

Direct debit has one more quirk. Settlement takes a few days, so there is a window where Xero shows the invoice paid and the money is not in your account yet. That is normal rather than an error.

One thing changing on 1 October 2026

If you add a card surcharge to invoices, it stops working next month. The Reserve Bank has decided on removing surcharging across the eftpos, Mastercard and Visa networks from 1 October 2026. American Express and UnionPay are included, because both withdraw from their RBA undertakings the same day, and PayPal follows on 5 October.

That last part is worth knowing, because plenty of commentary still says Amex surcharging survives if it reflects your genuine cost. According to the RBA’s own guidance, it does not.

You do not have to do anything in Xero. Xero has said surcharges will stop automatically on 1 October and it will remove the option to pass on processing fees. Card payments keep working as normal.

We have written the change up properly in two places: what the surcharge ban actually covers, and what it really costs you to take a card. Worth ten minutes if you surcharge today.

Weekend rates, public holiday rates, booking fees and service fees are all untouched, because this is a card network ban rather than a ban on charging for anything. And direct debit is not a card, so it sits outside the change entirely. Which is another reason the rail you choose matters more than it used to.

Questions we get asked

What we would actually do

If you would rather someone went through it with you, this is the job, and it is usually about an hour.

• Go through your aged receivables and tell you which customers should be on direct debit and which should stay on cards.
• Set up the reminder schedule, and put contact level terms on the customers who need them.
• Check your merchant fees are coding to the right account with the right GST, and fix the months that are not.
• Check whether any invoice already out there has a surcharge on it and terms running past 30 September.