How We Modernised the Way We Pay Our Suppliers and Staff

I run a business with more than 300 suppliers and a team of staff to pay. I'm not an accountant and I don't have time to spend thinking about our accounting systems. We have a bookkeeper to help us with that. But I do care that our business is efficient and that we pay staff and suppliers safely and to the right bank accounts.

Three years ago, we moved from Sage to Xero. Our new bookkeeper recommended Xero and wanted to modernise the core finance system. It was a relatively big change but once we'd made the move, it quickly became part of the day-to-day running of the business. We rely on Xero far more than we ever relied on anything coming out of Sage.

What I hadn't really appreciated was how much Xero had developed beyond being simply a piece of bookkeeping software.

It now sits at the centre of much more of the financial workflow including payroll and making payments to suppliers and staff.

Our bookkeeper recently recommended that we look at Xero Pay for making supplier and employee payments. On the face of it, that made a lot of sense. No more making payments manually and paying the wrong suppliers the wrong amounts.

But there was one obvious question:

Where were all the bank details going to come from?

We have more than 300 suppliers, as well as our employees.

That's a lot of bank details to collect, check and keep up to date.

If we were going to start using Xero Pay properly, I didn't want someone sitting down and manually entering 300-plus supplier bank accounts into Xero.

Apart from the amount of time that would take and cost of that to the business, it just doesn't make sense from a control point of view. A more efficient system has to also be a safer system.

People make mistakes. Someone can type a number incorrectly. Someone can copy the wrong account from an email. Someone can update the wrong supplier record. And, perhaps more importantly, there is the question of whether the bank details you've been given are actually correct in the first place.

Getting the bank details into Xero is only half the problem. You need confidence in where those details came from.

The old way was becoming difficult to justify

Like most businesses, we've traditionally collected bank details in a variety of ways.

A supplier might put them on an invoice. Someone might email them over. We might receive a PDF or a form. Occasionally somebody needs to change their bank account and sends another email asking us to update the details.

When you're a smaller business, you can get away with that.

But once you've got hundreds of suppliers, it becomes difficult to manage properly.

You're relying on people to read information from one system and type it into another. You're potentially storing bank details in emails and spreadsheets. And every time a supplier changes its bank account, you have another manual process to go through.

That's not particularly efficient and it isn't how I'd choose to design a system today.

What appealed to me about Paylist was that it dealt with the bit of the process that we hadn't really solved.

Rather than our team having to collect bank details from every supplier and manually enter them into Xero, Paylist gives our suppliers a way to provide and maintain their own payment information. If they change banks, our system is updated automatically.

That means we're not relying on someone in our business to type hundreds of account numbers and sort codes into our accounting system.

The workflow becomes much simpler:

Supplier → Paylist → Xero → Xero Pay → Payment

I don't particularly want another system for the sake of having another system. I want the systems we've already invested in to work together properly.

It also helps with the fraud risk

The efficiency argument is one thing, but for me the security side is just as important. We get a lot of emails trying to trick us into sending money to the wrong bank account. Changing supplier bank details is an obvious point of risk.

If someone sends an email saying, "We've changed our bank account, please use these details from now on," I don't want that email to become the single source of truth for where we're going to send thousands of pounds. I want a proper process around it.

Paylist gives us a way of separating the payment information from the invoice or email conversation and having the supplier provide and maintain its own details. That gives me much more confidence in the process.

It doesn't mean we suddenly don't need any other financial controls. We still need sensible payment approvals and the normal checks you'd expect in a business. I still need to see who we're paying and for what — Xero Pay allows that. But Paylist removed one of the more obvious weak points — people manually copying bank details.

It's not just suppliers

The same thinking applies to our employees. We have staff joining the business, staff leaving and occasionally people changing their bank accounts.

Again, I don't want bank details being passed around unnecessarily by email or sitting in spreadsheets that somebody has to update manually.

If employees can provide and maintain their own payment information in our system, it takes another manual job away from the business and reduces the opportunity for someone to enter something incorrectly.

Xero has become much more than our bookkeeping system

One of the things I've noticed since we moved from Sage is how much more Xero can now do. When we first moved across, I mainly thought of it as our accounting and bookkeeping software.

Now it can play a much bigger role in the financial side of the business: from managing our accounts and payroll through to supplier and employee payments and other connected services.

That changes the way I think about it. If Xero is going to be the system sitting at the centre of our finances, then I want the information going into it to be accurate and reliable. There's not much point having a modern accounting and payment system if we're still relying on emails, PDFs and spreadsheets to work out where to send the money.

The real benefit is making the workflow simpler

From my perspective, this isn't really about the technology, it's about removing jobs that people shouldn't have to do manually. I don't want our bookkeeper spending hours copying bank details. I don't want employees emailing sensitive information around. I don't want suppliers sending bank details in different formats.

I don't want someone having to manually update hundreds of records every time we change the way we make payments. And I definitely don't want to discover that we've paid the wrong bank account because some fraudulent payment details made their way into our system.

The supplier provides its payment details → Paylist holds them → they get into Xero → Xero Pay makes the payment.

That's a much more sensible workflow.

For us, it's about joining everything up. I'm not particularly interested in becoming an expert in accounting software. That's what we've got a bookkeeper for. But as the owner of the business, I do want to know that our financial systems are sensible, efficient and properly controlled.

Moving from Sage to Xero was one part of that. Using Xero Pay is another. And using Paylist to make sure we can get accurate supplier and employee bank details into that process is what ties it together.

With more than 300 suppliers and our own staff to pay, manually managing all those payment details simply isn't practical anymore.

For me, the big win is that the whole process becomes simpler, more integrated and safer — without requiring the business to keep adding more manual work.