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How to set up Direct Debit payments in Xero

GoCardless
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Last editedMay 20222 min read

Accepting Direct Debit cuts down on invoice payment times to improve your business’s cash flow, and it makes life easier for customers too. If you use Xero accounting software, you might be wondering – can Xero do Direct Debit? Fortunately, the answer is yes, and it’s easy to integrate with GoCardless. Here’s how to set up Direct Debit payments in Xero.

How do I set up a Direct Debit in Xero?

Xero lets you create and issue invoices for your customers, but when the time comes for payment, you might be wondering: how do I set up a Direct Debit in Xero? It’s easiest to use an integrated Direct Debit provider like GoCardless. Here’s a general rundown of how the process works:

  1. Set up an account with a Direct Debit provider either directly or via Xero’s platform.

  2. Send customers an invitation to pay using Direct Debit. The customers will need to fill out this form to authorise payments from their bank accounts.

  3. Set up the payments, whether they’re for one-off invoices or recurring services.

  4. The customer receives automatic notifications before Direct Debits are taken out of their account.

  5. The payment is taken from the customer’s account and transferred into your account. The provider’s fee is taken from this payment.

You’ll be able to manage this entire process online.

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How to set up Xero Direct Debit with GoCardless

Now we’ll explain the process in greater detail, specifically for GoCardless users who wish to set up Direct Debit payments in Xero.

1. To get started, you’ll need to log into Xero and add GoCardless as a payment service:

  • From the Payment services screen, click the organisation name, selecting ‘Settings’ followed by ‘Payment Services’.

  • From an existing invoice or invoice template, click ‘Get set up now’ under ‘Online Payments’.

2. The next step is to click on ‘Get started’ next to Direct Debit, where you can select one of the following options:

  • ‘I have a GoCardless account’ to connect your existing account, selecting whether you already have existing Direct Debit mandates.

  • ‘Sign up for GoCardless’ to connect a new account to Xero Direct Debit.

3. You will be directed to the GoCardless website where you will either create a GoCardless account or connect your existing one.

4. Once the GoCardless account is connected, yYou’ll now be redirected back to Xero, where you can select the bank account and currency you wish to receive your Direct Debit payments.

5. Create a new fee account and click to continue on the ‘Let Xero manage your fees’ screen. This will add any applicable taxes.

You’ll then be able to verify your account as the final step, allowing you to collect payments using the GoCardless integration with Xero.

How to add foreign currencies to Xero Direct Debit

Do you send invoices to customers in multiple foreign currencies? You can also get this set up by going to your Settings screen, selecting ‘Payment Services’ and clicking through to GoCardless to edit the service details.

Click ‘Add another currency’ and select the bank account you’ll be using. Xero can then create a separate clearing account for each currency you wish to set up.

How long does the Xero Direct Debit process take?

Processing times vary, but generally it takes about six working days for the customer’s first payment to clear. This is because it needs to be authorised by the bank to set up this initial transaction. For recurring payments from subscription or repeat clients, you’ll find the process is faster after the initial approval.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Take control of payment collection with Direct Debit via GoCardless. Eliminate late payments. Reduce time spent on financial admin. Get paid on time, every time.

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