Use Xero's expected payment date to forecast when you'll receive payment

Summary

• Your cash flow forecast is likely built on due dates, but customers don’t pay on due dates, which is why a forecast can look healthy and still leave you short.
• Setting a realistic expected payment date pulls an overdue invoice into the projection and puts it in the right week.
• You don’t need a signed commitment to set one. A plain email reply or a remittance advice is a good enough signal. Anything vaguer than a specific day just adds noise.
• Trove reads the date from your customers’ replies and remittances and updates Xero for you, giving you a live list of when payment is actually due to arrive.

Why expected payment dates make your forecast more accurate

A standard forecast projects your cash balance from invoices due, bills to pay, and your current bank position. The weak point is the invoices. An overdue invoice still sitting on its original due date is telling the forecast a date you already know is wrong.

Set a realistic expected payment date and suddenly your cash flow starts being more accurate. The catch, as ever, is upkeep - it only stays useful if the data stays accurate as expected payment dates are missed or changed.

What to accept from a customer as an expected date

You don’t need a signed commitment to set an expected payment date. You need a reasonable signal of when payment will arrive. In practice, two things are enough:

• A plain email reply. “We’ll pay on the 28th” or “this’ll go out on next month’s payment run” is a clear enough date to forecast against.
• Remittance advice. When a customer sends remittance, you’ve got a firm date and often a confirmed amount, which is about as reliable as a signal gets before the money actually lands.

Anything vaguer than that (“soon”, “shortly”, “once we’ve sorted our end”) isn’t a date, and setting an expected date off the back of it just puts noise into your forecast. Wait for a real one.

Trove reads the date from your email and updates it automatically

This is where keeping the forecast current stops being manual. When a customer replies to a chase or sends remittance advice through Trove, Trove reads the date out of the message and updates the expected payment date against the invoice in Xero. You don’t retype anything, and the forecast updates off the back of a message the customer sent you anyway.

Because Trove connects to Xero with a two-way sync, the date you see in Trove and the date feeding your Xero forecast are always the same one.

The takeaway

A forecast built on due dates tells you when customers were meant to pay. A forecast built on expected payment dates tells you when they actually will. The first is easy and wrong; the second is accurate right up until the dates go stale. Letting Trove keep those dates current from your customers’ own replies is what keeps the second one true.

To see how the date gets from a customer’s email into Xero, read updating Xero’s expected payment date directly from your email.