Streamline Invoice Payments: Integrate Xero with Pinch Payments

On average, Australian small businesses wait 22 days for payment — leaving them to fund payroll, suppliers, and daily operations for more than three weeks before getting paid for completed work. Most of that problem starts with a single friction point: invoices that are hard to pay. Xero has become the go-to accounting platform for Australian small businesses, and one of the most common questions new users ask is: can you actually pay invoices through Xero?

The short answer is yes — but Xero itself doesn't process the payment. You'll need a connected payment gateway to make it happen. Here's what that means in practice, and how Pinch makes the whole experience seamless.

How Xero Invoice Payments Work

Xero is purpose-built for creating, sending, and tracking invoices. When you send an invoice through Xero, your customer receives it by email (or SMS) with a Pay Now button embedded directly in the invoice. They click it, choose a payment method, and the invoice is marked as paid — all without you chasing anyone.

Xero supports a range of payment methods through its connected apps, including credit and debit cards, direct debit, digital wallets like Apple Pay and Google Pay, and bank transfers. The key is that Xero itself doesn't process the transaction — it connects to a payment gateway that handles the money movement, then automatically updates the invoice status and reconciles the payment in your books.

According to Xero's own data, invoices sent via SMS with a payment service included are paid significantly faster than those sent without one — a compelling reason to set this up if you haven't already.

The Gap: What Xero Doesn't Do on Its Own

Without a payment gateway connected, your customers can view their invoice online but can't pay it there and then. They'd need to make a separate bank transfer, which means more friction, more delays, and more time you spend chasing.

Xero integrates with a number of payment providers through its App Store. The right choice for your business depends on the payment methods you want to accept, how you bill (one-off vs recurring), and how much reconciliation work you want to handle manually.

Enter Pinch: The Highest-Rated Xero Payments App

Pinch is the highest-rated Xero payment services app in the world — and it's built specifically for businesses that want to get paid faster with less admin.

When you connect Pinch to Xero, it attaches a secure Pay Now link to your invoices automatically. Customers can pay by Visa, Mastercard, American Express, or Australian bank transfer (direct debit). Funds settle into your account in as little as 2 business days.

But Pinch goes well beyond a simple Pay Now button. Here are the three main ways to get paid with Pinch and Xero:

1. Get Paid from an Invoice (Pay Now)

The simplest way to start. During setup, you select which Xero branding themes should include a Pinch payment link. From that point on, every invoice you send includes a Pay Now button. Customers click it, enter their payment details on a secure Pinch page, and you receive confirmation once payment is complete.

No changes to your invoicing workflow. No manual reconciliation. Just faster payments.

2. Get Paid with Recurring Payments (Pre-Approvals)

If you bill customers on a regular basis — retainers, subscriptions, ongoing services — Pre-Approvals let you collect payment automatically on the invoice due date.

Here's how it works: in Pinch, go to Customers > Manage Pre-Approvals and select the customers you want to set up. Pinch sends them a secure email invitation to store their payment details. Once they accept, Pinch automatically debits their account whenever a new invoice is raised in Xero — no manual intervention needed on either side.

Pre-Approvals work for any invoice amount and any billing frequency, and they support both credit card and bank transfer. You stay in control — you can set thresholds to automatically collect smaller amounts while leaving larger invoices for manual review.

3. Get Paid in Instalments (Payment Plans)

For larger invoices, you can offer customers the option to pay in instalments instead of one lump sum. In the Pinch portal, go to Plans and Subscriptions > Breakdown an Existing Invoice and set up a schedule using fixed amounts, percentages, or a mix.

If the customer already has a Pre-Approval in place, the instalment plan starts immediately. If not, they'll receive an email to approve the plan before payments begin.

Batch Payments: Recover Aged Invoices in One Click

One of Pinch's standout features for Xero users is batch payments. When a customer visits their Pay Now page, Pinch automatically scans Xero for any other outstanding invoices from that customer and presents them all in one place. The customer can choose to pay off multiple invoices in a single transaction — all tracked through the Pinch customer portal.

This is a powerful tool for clearing aged receivables without awkward follow-up conversations.

How Reconciliation Works with Pinch and Xero

This is where Pinch really earns its reputation. Reconciling payments from external gateways is normally tedious — but Pinch handles everything automatically in Xero on your behalf.

When a payment is taken, Pinch finds the matching invoice in Xero and marks it as paid. The payment is allocated to a dedicated Pinch Payments Clearing Account created automatically when you connect your accounts. This gives you a clear view of funds collected but not yet settled to your bank.

When settlement occurs, Pinch does the following automatically in Xero:

Creates and marks as paid a bill for the Pinch fees
If you surcharge fees to customers, raises the surcharge invoice to the customer and marks it as paid
Creates an account transaction that exactly matches the net amount deposited into your bank account

The result? Reconciliation is a single click in your Xero bank feed — whether Pinch settled 1 payment or 100. The Clearing Account always returns to $0 after settlement, and your accountant can see full settlement details, including fee breakdowns, at any time.

No manual data entry. No mismatched amounts. No chasing your bookkeeper.

Why Choose Pinch for Xero Payments?

Here's a summary of what Pinch adds to your Xero setup:

Pay Now button on every invoice — accept credit cards, debit cards, Amex, and Australian bank transfers
Recurring payments (Pre-Approvals) — automatically debit customers on invoice due dates
Variable billing — collect any ad-hoc invoice amount, with thresholds you control
Payment plans — break large invoices into instalments
Batch payments — let customers clear multiple invoices in one go
Automatic reconciliation — one-click bank reconciliation, no matter how many payments
On-charge subscriptions — if you pay Xero subscription fees on behalf of clients, automatically on-charge those fees using Pinch

Pinch is free to use. You only pay per transaction, and you can pass those fees on to your customers. Rates start at 1.95% + 30¢ for Visa and Mastercard and 1.00% + 30¢ (capped at $5) for bank transfers. See the full Pinch pricing page for details.