Xero has switched on online bill payments for Australian businesses, making it possible to manage the payment process without leaving your accounting software.
“Most businesses don’t need a faster way to pay bills. What they need is a clear record of who prepared a payment and who approved it – and that’s the part this actually changes.”
Andrew Holmes | Director
Instead of exporting an ABA file and uploading it to your bank, you can now select the bills you want to pay in Xero, choose Make online payments and the payment is processed from there.
While each individual step may only take a few minutes, those minutes can quickly add up for businesses processing dozens of supplier bills each month. Moving the process into one system can reduce manual handling and give businesses greater visibility over who has prepared and approved payments.
It’s not necessarily something every business needs to switch to. If you only make a small number of payments each month and already have an efficient ABA process, there may be little reason to change.
But if you’re paying around 10 or more bills a month, particularly if you’re re-keying payment details or exporting ABA files, the time saving and approval trail make online bill payments worth turning on.
How to set up Xero online bill payments
Setting up online bill payments
Setting up online bill payments only needs to be done once.
In Xero, go to Bills and select Set up bill payments. You need to be the subscriber to your Xero organisation, or hold the ‘manage users’ permission to do this.
You’ll need to verify your business details with Airwallex, including your ABN, address, industry and the identification of beneficial owners and controllers. Don’t worry, this is an anti-money-laundering requirement – not Xero being nosey.
Most businesses are approved within minutes, although some applications are referred for manual review. This will usually clear within two calendar days.
You’ll then connect the bank account you want to pay from, either through a PayTo agreement or a direct debit authority.
Paying your bills
Once online bill payments are set up, paying your bills takes just four clicks.
Select the bill you want to pay, choose the account you want to pay from, select how the supplier will receive the money and confirm the payment.
Suppliers can be paid by bank transfer, PayID or BPAY.
If you fund payments through PayTo, payments should leave in real time; direct debit funding takes one to three business days.
The payments themselves are processed by Airwallex, an ASIC-licensed Australian payments platform Xero has partnered with.
What to know before you make the switch
Cost
Set-up is free and there’s no extra subscription. Your existing Xero plan includes a set number of domestic bill payments each month:
- Ignite: No payments included
- Grow: 5
- Comprehensive: 10
- Ultimate: 15
- Ultra: 20
Once you go over your included payments, each additional payment costs 35 cents – on any plan. Because Ignite doesn’t include any, every payment on that plan attracts the fee.
Xero is currently waiving payment fees for the first 30 days for Australian businesses that set up by 31 October 2026.
Limits
There’s a $250,000 cap per bill in Xero, but the practical constraint is usually your own bank. A PayTo agreement carries a limit set by your bank, and it’s that limit, not Xero’s, that will stop a large payment.
Banks commonly set PayTo limits at around $25,000 per transaction, but this varies between banks and between customers, and many banks let you view and amend the agreement in your banking app. If you regularly pay large single invoices, check yours first.
If a single invoice sits above your PayTo limit, you have three options: fund that payment by direct debit instead, which is not bound by the PayTo limit but takes one to three business days; ask your bank to lift the limit; or pay that one invoice through your bank portal or an ABA file as usual. Xero’s $250,000 per-bill cap still applies either way.
Approvals
You can have staff or your bookkeeper prepare the payment run and require the owner to authorise it.
If you’ve been sharing bank logins to manage payments, this provides a better way to manage approvals and keep a record of who has authorised payments.
What it doesn’t do yet
At this stage, online bill payments are for AUD payments within Australia only.
There’s no option to schedule future-dated payments, and the feature is limited to bills rather than payroll or expense reimbursements. Xero has flagged both scheduling and international payments for later this year.
ABA files still work
If you’d rather continue using ABA files, you can. Nothing is being taken away.
What could this mean for your business?
The biggest benefit of online bill payments isn’t necessarily the four clicks it takes to make a payment. It’s what removing the extra steps could mean for the way your business manages accounts payable.
Less administration
If your business is processing a high volume of supplier bills, removing the need to export and upload ABA files can save time across each payment run. The saving on an individual payment may be small, but it adds up over weeks and months, particularly when bookkeeping or administration time is already stretched.
Fewer manual steps and better visibility
Keeping the bill and payment process within Xero reduces the need to re-enter payment information and makes it easier to see where a payment is up to. You can also have staff or your bookkeeper prepare the payment run while the owner authorises it, giving you a clear record of who prepared and approved each payment.
A process that can grow with you
A payment process that works well when you have a handful of suppliers can become cumbersome as the number of invoices, staff and payment responsibilities grows. Bringing payments into Xero gives you a way to streamline accounts payable without introducing another system.
Is it worth switching?
If you’re paying around 10 or more bills a month and currently re-keying payment details or exporting ABA files, yes – it’s worth turning on.
The time saving is useful, but the bigger win is the approval trail and not having to type BSBs into a bank portal by hand.
Below is a guide on whether this switch is suitable for you:
| If your business… | Consider… |
| Pays lots of domestic supplier bills | Online payments |
| Has multiple people preparing/approving payments | Online payments |
| Makes large payments regularly | Check PayTo limits first |
| Makes international payments | Keep your existing process for now |
| Only pays a handful of bills | ABA may still be perfectly adequate |
| Already has an efficient ABA process | There may be little reason to change |
Final thoughts
One warning applies whichever way you pay: payment redirection fraud is the most common way small businesses lose money right now.
If a supplier emails you with new bank details, always call them using the number you already have on file, not the one in the email, before changing anything in Xero.
If you’re reviewing your payment process, B+N can also help you look at the bigger picture. From payment approvals and access controls to establishing clear financial processes as your business grows, our team can help you identify where stronger controls could reduce risk and make financial administration easier to manage. Get in touch with B+N to discuss your business’s financial processes and how we can support you.
Need help setting up online bill payments or not sure if they’re right for you? Book a free 15-minute discovery call >
Business + Numbers is not affiliated with Xero or Airwallex and receives nothing for this recommendation. This article provides general information only. It doesn’t take your specific business circumstances into account. Please talk to us or your accountant before acting on any of the information provided.
