The problem
Monthly fee clients pay by bank transfer when they remember, and someone has to chase the late ones and match the rest to invoices. If 80 clients pay monthly, 20 pay late and each chase takes 20 minutes, that's 400 minutes, plus 2 minutes matching each of 80 payments, about 9.3 hours a month.
What the AI does
GoCardless for Xero collects payments for your Xero invoices automatically from the client's bank account on the due date, by Direct Debit. The client sets it up once by clicking 'Pay now' on an invoice. When a payment arrives, Xero marks the invoice paid and reconciles it, recording the GoCardless fee as an expense. You only chase the few payments that fail.
A worked example
A four-person practice in Chelmsford already uses Xero for its own invoicing and has 80 clients on monthly fees averaging $160£120€143A$230C$226. It moves them to GoCardless over two months, starting with the clients who pay late most often.
Before
20 late payments chased at 20 minutes, and 80 payments matched by hand: about 9.3 hours a month
After
About 3 failed payments chased a month and reconciliation handled in Xero: 1 hour a month
What it's worth
About $499£375€446A$720C$705 a month in staff time, against about $149£112€133A$215C$211 a month in GoCardless fees. That is 500 minutes saved (400 minutes of chasing down to 60, plus 160 minutes of matching) or about 8.3 hours, at an assumed $60£45€54A$86C$85 an hour. On the Standard plan each $160£120€143A$230C$226 payment costs 1% + 20p, $1.86£1.40€1.67A$2.69C$2.63, so 80 payments is $149£112€133A$215C$211 a month, excluding VAT; connecting GoCardless to Xero has no separate charge.
How to set it up
- Open a GoCardless account and connect it to your Xero organization.
- Tell clients in advance that fees will move to Direct Debit and why, and update your engagement letter terms.
- Add GoCardless as a payment option on your fee invoices so each client can set up the mandate from 'Pay now'.
- Set up the second bank account in Xero that GoCardless needs for reconciliation, as its guide describes.
- Each month, check the failed payments list and chase those clients personally.
What goes wrong
- Fees are per payment: 1% + 20p on Standard, capped at $5£4€5A$8C$8 with 0.3% extra on Direct Debits over $2,660£2,000€2,380A$3,840C$3,760. Annual fee clients paying large sums cost more per payment.
- Reconciliation only works for payments taken through the Xero integration. Payments set up in the GoCardless dashboard need matching by hand.
- Clients can cancel a mandate at their bank at any time. A canceled mandate shows as a failed payment, so check the list monthly.
- Bank details pass through GoCardless, not you, but your privacy notice should still say how fees are collected, under UK GDPR.