Debtor Management is a key business task for a business to keep a healthy cash flow. There are several aspects of Debtor Management, including:

1. Ensuring your sales invoices are issued and sent to your customers on time;
2. Stipulating payment terms in your Terms & Conditions agreements or Engagement Contracts;
3. Providing your customers with a variety of payment options to pay for their invoices;
4. Making Due Dates clearly visible on your invoices;
5. Setting up Credit Limits for each of your 30 and 60 account customers;
6. Implementing and following a proper debtor recovery process, which includes:
   • Reviewing Aged Debtors reports monthly;
   • Consistently chasing payments for outstanding debtors and/or invoices;
   • Escalating debtors to Debt Collecting agencies and/or legal action;
   • Writing off any unrecoverable invoices as bad debts before the end of each Financial Year.

A high profit showing on your Profit and Loss is useless if a business consistently runs on negative cash flow. If customers don't pay their invoices, a business will eventually run out of funds to pay suppliers and wages and eventually will have to close. 

Small businesses often struggle to introduce and maintain a consistent Debtor Management process. They are often so busy working in the business that they often lack the necessary time to follow up on payments. This is why it is important to automate as many aspects of the debtor management process as possible.

One of these key aspects is consistently following up on outstanding invoices and debtors. Xero automates this task by introducing Invoice Payment email reminders (or Invoice Reminders). 

Invoice Reminders

Invoice Reminders is scheduling automatic email reminders sent to customers with outstanding invoices. Invoice Reminders are triggered based on the invoice due date. When the invoice is due by a set number of days (set in the invoice reminder), this triggers an email sent to the customer.

When setting invoice reminders, these are automatically enabled for all customers. However, they can be disabled for individual customers or even individual invoices. 

It is important to understand that Xero provides Invoice Reminders, not Debtor Reminders. This means that the reminder is sent for each late invoice. This feature may not be useful if your business manages account customers whose payment terms are 30 days from end of month, as Xero will send a reminder for each invoice. In this instance, you may need to introduce a third-party app that manages Debtor Reminders, triggering one email reminder displaying a list of outstanding invoices. EzyCollect is one of the best Debtor Management apps available on the Xero Marketplace. 

Setting up Invoice Reminders

1. From the Organisation Menu, go to Settings > Invoice Settings
   
   è  The Invoice Settings screen opens
   
   
2. Click on [Invoice Reminders]
   
   è  The Invoice Reminders screen opens
   
   
   
3. Select the option: Email customers when an invoice is...
4. Click on Edit next to the first reminder
   
   è  The Edit Reminder pop-up screen opens
   
   
   
5. Edit the number of days the invoice is overdue by
6. Amend the email reminder text
   
7. Click on [Save]
8. Repeat the above steps for all other email reminders
9. You can set up as many payment reminders as you want to
10. Once you have set up all Invoice Reminders, click on [Save]
    
    è  The Invoice Reminders are automatically enabled for all customers
    TIPè When you create the email reminder, make sure you always include the following statement
    Please disregard this notice if you have already paid this invoice.

Enable/Disable Payment Reminders

You can enable and disable invoice payment reminders either at the contact level (this option automatically turns off all invoices' payment reminders linked to the contact) or for an individual invoice.

Contact Reminders

1. Go to the Customer Contact

è  The Customer Contact screen




2. Click on the ellipsis icon on the top right-hand side of the screen and select Turn off invoice reminders

Individual Invoice Reminders

1. Open the customer's sales invoice
   
   è  The Customer's Sales Invoice screen
   
   
   
   
2. Click on [Invoice Options] > Turn invoice reminders off