Xero invoice reminders — how to set them up, and where they stop

Start here: if Xero's invoice reminders are switched off, switch them on this afternoon. They are included in what you already pay, they take about ten minutes to configure, and they will collect money you would otherwise have chased by hand.

Then read the second half of this, because the gap between what they do and what credit control is turns out to be most of the job.

Setting them up properly

The mechanics live in Xero's own documentation and change from time to time, so follow Xero Central for the current steps rather than a screenshot in an article. What is worth deciding before you go in there:

How many reminders, and at what offsets. Xero lets you schedule reminders relative to the due date, before as well as after. Most agencies set only "after" and miss the highest-value one.

Set a reminder for a few days before the due date. This is the single best configuration change available to you. A pre-due note catches every invoice that went to the wrong person or is missing a purchase order while that is still free to fix — before anybody is late, before anybody is embarrassed. Chasing after the date is a complaint; confirming before it is service.

Use the minimum-amount threshold. There is a setting to skip invoices under a value you choose. Without it you will eventually chase a good client over a £30 balance, which costs more goodwill than the £30 is worth.

Turn reminders off for specific contacts. Some clients should never get a templated email — the ones on a payment plan, the ones in a dispute, the one whose finance director you play squash with. Reminders can be disabled per contact and should be.

Write the template like a person. The default is serviceable and reads like a system. Put your name in it, keep it short, name the amount and the invoice number, and ask a question that can be answered in one line. The five-email ladder is a good source of wording, though you only get one template to work with here.

Check where they come from. Reminders are sent by Xero with your address normally set as reply-to. Send yourself a test to a personal address and look at what actually arrives, including whether it lands in the promotions tab. That last detail decides whether any of this works.

Where they stop

Four limits, and they are structural rather than missing features. They follow from what a scheduled reminder is.

They cannot read the reply

The reply goes to your inbox and the schedule carries on regardless. So the work — and it is all of the work — is unchanged: somebody still has to read every response, work out whether it is a promise, a query, a dispute or an out-of-office, and do the right thing with it.

This is the whole job. A client who replies "we're paying on the 25th", a client who replies "the March retainer is wrong", and a client whose assistant replies "Sarah is on leave until the 3rd" need three completely different responses, and a scheduler gives all three the same one: another reminder next Tuesday.

They cannot tell that a payment has landed

Reminders fire on invoice status, and an invoice stays awaiting payment until the bank line is reconciled against it. If a client pays on Tuesday and the reconciliation happens on Friday, Wednesday's reminder goes out anyway.

Chasing a client who has already paid is worse than not chasing at all. It is also the most common reason agencies turn reminders off a month after turning them on — one embarrassing email is enough.

They have one voice for everyone

One template, one tone, one schedule for the whole organisation. Your twenty-year retainer client and the new client who has never paid on time get the identical message on the identical day.

Escalation — gentle at three days, firmer at two weeks, formal at four, with the tone tuned to the individual relationship — is not something you can express in a single template. It is also the thing that makes chasing work without costing you the client.

They do not know what was agreed

A reminder has no memory of a phone call. If a client committed to the 25th, nothing in the schedule knows it, nothing chases on the 26th, and nothing notices that a commitment was broken rather than an invoice merely being late.

Broken promises are the most valuable event in credit control and the easiest to miss. More on why that matters.

What is still yours after you turn them on

Being concrete about the remaining job, because it is easy to switch reminders on and feel finished:

• Reading and classifying every reply.
• Recording every promised date, and chasing the morning after one is missed.
• Deciding when a client's tone should change, and by how much.
• Spotting a dispute early and stopping the chase on that account.
• Working out and claiming statutory interest and the fixed compensation, which Xero does not calculate for you.
• Proposing and then policing payment plans.
• Noticing when one client has become too large a share of what you are owed.
• Escalating to a letter before action when it comes to that.

That list is the job description of a credit controller. Reminders take the typing off it, which was never the expensive part.

The honest summary

Xero's reminders are free, genuinely useful, and correctly scoped: Xero is an accounting system and does not pretend to be a collections function.

If your overdue list is short and mostly consists of invoices nobody has got round to, they may be all you need. If your overdue list contains disputes, instalment plans, promises, one client who is a third of your book, or anything that requires a decision rather than a reminder, they are the floor rather than the answer — here is how to think about what sits above them.

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Xero's settings and limits change; check Xero Central for the current behaviour before configuring anything important.