The short answer
In Xero, a batch payment pays several approved bills from one bank account in a single payment. Each entity in a group is its own Xero organisation, with its own bills and bank accounts, so a batch can only include bills from that one file. A group with ten entities builds, sends and reconciles ten batches every pay run.
To pay across entities in one pass, finance teams either repeat the run file by file on a fixed schedule, or add a payables layer above Xero that prepares one group run and posts a batch to each entity’s file.
How to create a batch payment in Xero
These are the steps inside one Xero organisation. Menu names vary a little between Xero versions and regions.
Set up the bank account
Turn on batch payments for the account you pay suppliers from. In Australia this usually means adding the direct entry details your bank gives you, such as your user ID, so Xero can create an ABA file.
Check supplier bank details
Each supplier needs their bank details saved on their Xero contact. Only add or change them from a source you have verified.
Approve the bills
Only approved bills, in the Awaiting payment tab, can go into a batch.
Select the bills and create the batch
Tick the bills you want to pay, choose Make payment, then Batch payment. Set the payment date and bank account, and check each amount. You can part-pay a bill by changing its amount.
Send the payment
Export the batch file, upload it to your internet banking and approve it there under your bank’s rules. Where Xero’s online bill payments are available, you can pay up to 200 bills in one batch directly from Xero, within your bank’s daily limits.
Reconcile and send remittances
For an uploaded batch file, the bank feed usually shows one line for the total, and Xero suggests a match to the batch payment. Send remittance advice so each supplier knows what you paid.
Why it gets harder with every entity
Xero keeps each legal entity in its own organisation, with its own suppliers, bills, chart of accounts, approvals and payment batches. There is no shared payables layer across files, so each entity runs its own pay run.
A batch can only hold bills from one Xero file. A group with ten entities builds, sends and reconciles ten batches every pay run.
The run repeats in every file
Someone logs in to each entity, selects its bills, builds the batch, exports the file and uploads it to that entity’s bank account. Then they reconcile each one.
The group picture lives in a spreadsheet
To see what the whole group owes this week, finance pulls aged payables from each file and combines them by hand before deciding what to pay.
Problems hide between files
A supplier that bills several entities shows up in several batches. An invoice sent to two entities can be paid twice, because each file only sees its own bills.
Checks before every group pay run
Whatever tools you use, a short routine keeps a multi-entity pay run on time and in control.
Set one pay day for the group
Pay suppliers on the same day across entities, with a fixed approval cut-off beforehand. Suppliers know when to expect payment, and the team runs batches once instead of whenever a file fills up.
Confirm what’s approved
Only bills that have been through your approval policy should reach a batch. Chase bills still waiting on an approver before the cut-off, not after.
Look for duplicates across entities
Search for the same supplier, invoice number and amount across every file, not only within one.
Stop on any bank detail change
Treat a change to a supplier’s bank details as a reason to pause. Confirm it with the supplier using contact details you already hold before the run.
Check the cash in each account
Each entity pays from its own bank account, so confirm each one can cover its batch.
Use clear references
Give each batch a reference that makes sense on the bank statement and to the supplier, such as the entity and the run date.
One payment run for the group with Derive
Derive brings a group’s Xero files into one place for payables. Bills from every entity arrive in one inbox, the AP Agent prepares them, and your team reviews and approves them. Each approved bill posts to the right entity’s Xero file with its documents and approval record.
When it’s time to pay, your team prepares one payment run across the group, built from invoices that are already approved. You review the run once, and Derive posts a batch to each entity’s Xero file. Nothing is paid until your team has reviewed it.
Because Derive sees every file at once, it can flag an invoice sent to two entities before it reaches a run. Finance sees what the whole group owes in one view, which makes cash flow easier to plan.
Read more about payment runs in accounts payable and how Derive works with Xero.