Xero accounts receivable automation: Xero invoice reminders and payment reminders that keep going after Xero stops

You manage accounts receivable in Xero by raising invoices against a customer contact, letting Xero post them to the Accounts Receivable control account, and then working the Aged Receivables Detail report until the balance clears. The moment you approve an invoice, Xero debits accounts receivable and credits the revenue account you picked on the line item. It stays there until a payment is received and reconciled against it.

The reporting side is strong. Aged Receivables Summary gives you one row per customer bucketed into current, 1 to 30, 31 to 60, 61 to 90 and older, which is the view you want when you are deciding who gets a phone call this week. Aged Receivables Detail drops to invoice level, which is the view you want when you are actually writing the chase. Both can be run as at a past date, which matters at year end.

Where Xero stops is the collection work itself. It will tell you with complete accuracy that $84,000 is sitting past 60 days across nine customers. It will send up to five automatic emails about it. It will not make the ninth phone call, it will not write the demand letter, and it will not tell you that a customer has run out of reminders and is now receiving nothing at all.

Xero sends a maximum of five automatic invoice reminders per invoice. Three are configured by default when you first switch reminders on, timed at 7, 14 and 21 days after the due date, and you can edit those three or delete them and write your own. You can add two more to reach the cap of five.

Each of the five stages is independently configurable. You choose whether it fires a set number of days before the due date or a set number of days after it, you edit the subject line and body from Xero's default template, and you can set a minimum invoice value so small balances do not trigger an email. You can also suppress reminders for a particular customer or a particular invoice, which is what you want for the client who is mid dispute or the one on an agreed payment plan.

The cap is the thing to plan around. Xero has had an open product idea requesting more than five reminders for years, and the position as of 2026 is that it remains under consideration. If your five stages are spread across the first three weeks past due, you have no automated contact at all from day 22 onward, which is precisely when an invoice starts turning into a bad debt.

Five is the whole budget, so the practical question is what covers day 30 onward. That is the job of standalone payment reminder software, which removes the cap and changes channel once email has stopped working.

Partly. Xero automates invoice delivery, repeating invoices, up to five reminder emails per invoice, and payment reconciliation through bank feeds. That covers the mechanical part of receivables well. What it does not automate is the judgment part: escalating language, deciding when an account moves from email to a phone call, applying the late fee your contract allows, or producing a demand letter.

There is also no notification when the reminder sequence is exhausted. An invoice that has taken all five emails and is still open looks identical in Xero to one that received its first reminder yesterday. Anything past the fifth reminder is manual, and manual receivables work is the first thing that gets dropped in a busy month.

This is the reason the Xero app marketplace has a whole category of receivables tools sitting on top of it. They exist because Xero deliberately stops at the ledger and the reminder, and treats the collection process as somebody else's job.

You write off an unpaid invoice in Xero by raising a credit note against it and coding that credit note to a bad debts expense account. Create the account first under Accounting, then Chart of Accounts, as an expense account named Bad Debts. Then open the unpaid invoice, choose Invoice Options and Add Credit Note, change the account on the credit note line to Bad Debts, and allocate the credit against the invoice so the balance clears.

Two things worth getting right. If you are registered for sales tax and you charged tax on the original invoice, code the credit note with the same tax rate so the tax you already reported is reversed. And on the federal side, the IRS treats a business bad debt as deductible only in the year it becomes worthless, meaning the year there is no reasonable expectation of repayment. If you file on the cash method you generally cannot deduct an unpaid invoice at all, because you never recorded the income.

The more useful question is timing. Writing an invoice off at 120 days because chasing it became tiresome is not the same as it being worthless. Recovery rates make the case plainly: an account under 90 days past due is commonly collected at over 70%, and the odds fall to roughly 50% at six months and around 10% at two years. Most of the difference is made in the window between day 22 and day 90, which is exactly the window Xero's five reminders do not cover.

The input is your Aged Receivables Detail export: customer name, invoice number, amount outstanding, invoice date, due date and a contact email address. That report already contains all of it, so there is no data preparation step and nothing to change in Xero. Nothing is written back into your ledger, which means your accountant's month end does not change and there is no risk of an automation touching the control account.

Practically that matters more than it sounds. The reason a lot of receivables projects die is that they ask a small finance team to grant write access to the general ledger and then run a data migration. Reading an aging export and sending email is a much smaller thing to say yes to, and you can stop it on any given Friday without unwinding anything.

Not much, and the numbers show why. Xero allows five automatic reminders per invoice. QuickBooks Online allows three, scheduled up to 90 days either side of the due date, and only on invoices that were originally emailed from QuickBooks. QuickBooks Desktop has no reminder scheduler at all. Xero is the more generous of the two, and it still runs out well before a genuinely delinquent account does.

Both packages made the same product decision: the ledger is the product, and collections is a workflow they will partly automate and then hand back to you. If you are running QuickBooks accounts receivable automation the shape of the fix is identical, only the reminder ceiling is lower.