Why Managing Bills (Accounts Payable) Matters for Your Nomad Business
Accounts Payable is simply the money your business owes to its suppliers and contractors. While it sounds straightforward, a poor AP process can cause serious problems:
Damaged Relationships: Late payments to your virtual assistant or freelance developer can strain relationships and disrupt your operations.
Wasted Money: Without a clear system, you risk making duplicate payments or missing out on early payment discounts.
Poor Cash Flow Visibility: You can't make smart business decisions if you don't have a real-time view of the money going out.
Admin Overload: Manually entering every bill, chasing approvals, and processing payments is a tedious, low-value task that steals time from growing your business.
The Traditional AP Workflow in Xero: The Manual Grind
Xero is powerful, but if you're handling AP manually, the process can still be a bottleneck, especially as your business grows. For an entrepreneur managing more than a handful of monthly bills, the manual workflow looks something like this:
Receive Invoice: A contractor emails you a PDF invoice.
Data Entry: You either manually type the details into a new bill in Xero or use the 'Email to Bills' feature, which still requires manual review and coding.
Verify & Approve: You check the bill for accuracy. If you have a business partner, you might have to forward it for approval, creating delays.
Schedule & Pay: You mark the bill for payment, add it to a batch, and then have to log into your bank separately to upload a payment file and execute the transfer.
Reconcile: Later, you have to match the bank transaction back to the bill payment in Xero.
Doing this for dozens of bills across different time zones is inefficient and prone to error. This is where automation becomes a game-changer for the location-independent business owner.
The Solution: Supercharging Xero with AP Automation
AP automation software integrates directly with Xero to handle the entire bill payment process for you. Think of it as hiring a world-class financial admin assistant who works 24/7, never makes a mistake, and costs a fraction of a human employee. This is the 'tax hacker' approach to financial management.
Here’s how an automated workflow transforms your business:
Effortless Bill Capture: Simply forward PDF invoices to a unique email address or have suppliers submit them through a portal. The software uses Optical Character Recognition (OCR) to read the invoice and create a bill in Xero automatically, with up to 80% of the manual work eliminated.
Automated Approvals: Set up custom rules to automatically route bills for approval. For example, any bill over $500 can be sent to your business partner's phone for one-click approval.
Seamless Global Payments: Pay hundreds of contractors in different countries with different currencies in a single batch, directly from your automation platform. The system handles the complexities of international transfers.
Self-Service for Suppliers: Your contractors and suppliers get their own portal to manage their information, upload invoices, and check on payment statuses. This means fewer 'When will I get paid?' emails for you. It also streamlines collecting crucial tax forms like the W-8BEN for your non-US contractors.
Real-Time Reconciliation: Payments are automatically recorded in Xero and reconciled in real-time, giving you a perfectly accurate, up-to-the-minute view of your cash flow.
Enhanced Fraud Protection: Advanced systems validate supplier bank details and screen payments against thousands of rules to flag potential duplicates, errors, or fraud before any money leaves your account.
Key Xero Workflows You Should Know
Even with automation, it's helpful to understand the basic building blocks within Xero. Here are the core manual functions that automation tools enhance.
1. Managing Suppliers (Contacts)
Every person or company you pay is a 'Contact' in Xero. It's crucial to keep this information organized, especially their bank details for batch payments.
To add a supplier: Go to Contacts > Suppliers > New contact. Fill in their name, email, and, most importantly, their bank account details under 'Batch Payments' in the Financial Details section. For non-US contractors working with your US LLC, you can also note their tax ID type (often from a W-8 form) here.
2. Entering and Approving Bills
This is the core of the AP process. You can see a summary of all your bills from the dashboard at Business > Purchases overview.
To create a new bill manually: Click the + New button and select New Bill. You'll enter the supplier, dates, reference number, and line items. You can attach the original invoice PDF for your records. Once entered, you can approve it yourself or submit it for approval.
Xero’s 'Email to Bills' feature (found in Business > Bills to pay) gives you a unique email address to forward invoices to, which creates a draft bill. This is a step up from pure manual entry, but full automation tools are far more powerful.
3. Paying Bills in Batches
Paying bills one by one is a huge time sink. Batch payments are the solution.
To create a batch payment: Go to Business > Bills to pay and select the 'Awaiting Payment' tab. Check the boxes for all the bills you want to pay, then click 'Batch Payment'. You'll confirm the details and then Xero will generate a payment file (e.g., an ABA or CSV file) that you must download and then upload to your online banking portal to execute the payments.
