If your business has an invoice finance facility, or a bank loan with reporting conditions, someone has to get numbers out of Xero and over to the lender on a regular cycle. This guide covers what lenders usually look at, which Xero reports give it to them, and how to stop it being a manual job.
One thing first: the exact reports, deadlines and rules are in your facility agreement, and they differ between lenders. Use this as a checklist to take to your agreement or your relationship manager, not as a replacement for either.
Invoice finance: it's mostly about the aged debtors
With factoring or invoice discounting, the provider lends against your unpaid invoices, so your aged debtors report is what they care about. They look at it when the facility is set up and keep reviewing it afterwards.
- Old debts often stop counting. Many providers only fund invoices up to a certain age, commonly 90 days and at some lenders 60. Older debts drop out of what you can draw.
- Some debts are usually excluded, such as disputed debts, debts from related companies, retentions and contra balances. Your agreement lists them.
- Check how age is counted. Some agreements count from the invoice date, others from a different point, such as the end of the invoice month. Xero can age by invoice date or due date, so if your agreement counts some other way, the report won't match it exactly and you or the lender will need to adjust.
In Xero this is the Aged Receivables Summary, with the Aged Receivables Detail if the provider wants the invoices behind each balance. Set Ageing by to match how your lender counts: invoice date if they count from the invoice, due date if they look at how late things are. Some may also want the aged creditors (Xero's Aged Payables Summary).
More on reading the report in our debtors report guide.
Does your provider already read Xero?
Some invoice finance providers connect to Xero directly and see your sales ledger as invoices are raised and paid. If yours does, you may not need to send the aged debtors at all, or only for periodic checks. Ask before building a routine you don't need.
Bank loans and overdrafts: information covenants
Business loans often come with information covenants: promises to send the bank regular financial information. Common ones are:
- Management accounts at set intervals, often quarterly, within a deadline your agreement sets.
- Annual accounts within a set number of months after your year end.
- A compliance certificate, a statement signed by a director confirming you meet the loan's conditions, often quarterly or yearly.
Under many agreements, sending late can count as a breach in itself, whatever the numbers say. Check what yours says, and make the sending automatic so it doesn't slip.
What to put in management accounts for a lender
A typical set of management accounts has a profit and loss, a balance sheet, a view of cash, and often aged debtors and creditors, plus a few lines of commentary on what changed and why. From Xero:
| Section | Xero report |
|---|---|
| Trading for the period | Profit and Loss, with the previous periods alongside |
| Financial position | Balance Sheet |
| Cash | Bank Summary |
| Who owes you, and who you owe | Aged Receivables Summary and Aged Payables Summary |
| Against plan | Budget Summary, if you keep a budget in Xero |
The commentary and the compliance certificate are the parts only you can write and sign. For building the pack itself, see our guide to Xero management report packs, and the free management accounts Excel template if you want to add your own charts and ratios.
Habits that keep lenders happy
- Send on the same day every period, well inside the deadline.
- Keep the period and layout the same each time, so the lender can compare.
- Copy yourself in, so you have a record of what was sent and when.
- Reconcile the bank accounts before the reports go out. Unreconciled items can leave the bank and cash figures out of step with your statements.
Sending them automatically
Xero can't email reports on a schedule, so most people export and attach them by hand. Reportpost does the sending for you. For example:
- The Aged Receivables Summary to your invoice finance provider every Monday, aged by invoice date or due date to match your agreement, with a list of unpaid invoices if they want the detail.
- A monthly or quarterly (calendar quarter) pack (profit and loss with comparisons, balance sheet, bank summary, aged debtors and creditors) to your relationship manager a few days after each period ends.
Reports go out as PDF, Excel or both, with an optional cover page on the PDF showing who they're prepared for, and replies come back to you. You can try the demo without connecting Xero.
Related: sending monthly management accounts from Xero and emailing the aged receivables report every week.