How to account for invoice financing in Xero

February 22, 2021
How to account for invoice financing in Xero

If you’re a Xero user, you may have found accounting for invoice financing something of an admin burden. However, Satago’s enhanced Xero integration means that when you take out invoice finance with us, you can post the accounting information directly to your Xero account, saving you time.

In this article, we'll show you how to account for invoice financing within Xero the standard way and using Satago's enhanced Xero integration feature.

What is invoice financing?

Businesses that invoice their customers can experience cashflow pinch points as they wait for clients to pay. Invoice financing allows businesses to unlock cash from unpaid invoices, ensuring they have enough working capital to keep their business running while waiting to be paid.  

When you apply for invoice finance, the lender will advance you a percentage of the value of your invoices (usually between 70-85%), you’ll receive this money in your bank account. Then, when your customer pays their invoice, the lender will collect the amount that was advanced plus their fees and the remaining funds will be transferred to you.

Satago offers single invoice finance — sometimes known as selective invoice finance. This means you can choose which invoices you want to finance on a flexible basis without being tied into a long-term contract.

Invoice finance is a useful way for businesses to cover short-term cashflow gaps and Satago’s enhanced integration with Xero makes accounting for invoice finance quick and painless.  

How invoice financing is usually accounted in Xero

The standard process for logging invoice finance in Xero manually is as follows:

How to account for invoice financing in Xero using Satago  

When you apply for invoice finance with Satago, the process of accounting the transactions in Xero is much easier. If you prefer, you can still use the manual way, but using the Satago system will save you time.

Here’s how to account for invoice financing in Xero with Satago:


How to enable Satago’s enhanced Xero integration

You will be prompted to enable the advanced Xero integration feature as soon as your invoice finance application has been approved. Simply select the correct accounts from the dropdown menu.  

How to apply for invoice finance with Satago  

If you’d like to apply for invoice finance with Satago, register securely on our platform and connect your accounting software in a few clicks (Satago connects to 300+ accounting platforms including Xero, Quickbooks, Sage and Freshbooks).  

Once connected, the platform will display which invoices are eligible for finance and show you the amount you can advance and the fees. Simply click to apply and, once approved, you will receive a cash advance in your bank account within 24 hours.  

If you have any questions, get in touch with our team: 02080503015