For a lot of MSPs it is, at least to begin with. Xero sends repeating invoices on a schedule, emails reminders when they go overdue, and lets clients pay online by card, direct debit or pay by bank through Stripe or GoCardless. Where MSPs tend to feel the limits is in collections as they grow: monthly invoices that change, clients who don't answer email, failed direct debits and one-off hardware or project invoices, and you can cover those by adding a payments and chasing layer that works inside Xero.
In this article
The short version
- Xero handles repeating invoices, email reminders for overdue invoices and online payments through Stripe or GoCardless.
- For a small MSP with fixed monthly fees, that can be all you need.
- Collections tend to stretch it when invoices change monthly, clients ignore email, direct debits fail or one-offs pile up.
- Adfin works alongside Xero, collecting variable direct debits from each invoice, chasing by email, SMS and WhatsApp, and marking invoices paid in Xero.
What Xero does well for an MSP
You can run most of an MSP's books comfortably in Xero. Repeating invoices go out automatically on the schedule you choose, so the monthly managed service fee for each client doesn't need raising by hand. You can see whether an invoice has been sent, opened, gone overdue or been paid.
Xero can also email automatic reminders once an invoice passes its due date, on a schedule you set, and you can switch them off for a particular contact or invoice. For a client who's simply forgotten, a polite reminder from your accounts system is often all it takes.
On payments, Xero lets clients pay an invoice online by debit or credit card, Apple Pay, Google Pay, or direct debit through GoCardless or Stripe. Pay by Bank is available through Stripe for one-off payments. You keep bank reconciliation, aged receivables and your VAT returns in the same place.
If your client list is fairly small, your fees are the same every month and most clients pay on time, that set-up may be all you need for a while.
Where MSP collections can outgrow it
The pressure usually shows up in collections, as you add clients and your billing gets less uniform.
Monthly invoices often change. Seat counts move, a new starter needs a licence, telecoms usage varies. If a client's direct debit is set up for a fixed recurring amount, the month the invoice changes is the month the collection and the invoice stop matching, and someone has to sort out the difference. A direct debit that takes its amount and date from each invoice avoids that.
Xero's reminders go by email, on the schedule you set. Some clients answer a text within minutes and ignore three emails. Others, such as a long-standing client you'd rather handle personally, need the chasing paused while you pick up the phone.
When a direct debit fails, somebody has to notice, decide whether to try again and offer the client another way to pay before the next month's invoice lands on top. With Xero and a separate payment provider, that can mean working across two systems.
Then there are the one-offs. A hardware deposit, a project milestone or a batch of annual licences doesn't fit the recurring routine. Ops may be waiting for finance to confirm a payment before ordering kit, and it's easy for these invoices to fall through the gaps between the monthly runs.
None of this is a fault in Xero. It's an accounting system first, with sensible built-in collections, and MSP billing tends to ask more of the collections side than a typical small business does.
How to weigh it up for your own clients
It can help to look at last quarter's invoices and ask a few plain questions.
- How many clients had a different invoice amount from one month to the next?
- How many invoices were paid more than a week late, and who chased them?
- How many direct debits failed, and how long did each take to recover?
- How many one-off invoices went out, and how were they paid?
If the answers are "not many" across the board, adding another tool may not be worth the change. If variable invoices and late one-offs are a weekly job for someone, that time is the cost to weigh against a collections layer. Either way, Xero can stay as your accounting system.
What to add alongside Xero
Adfin works alongside Xero with a two-way sync, and it's also available as a payment method inside Xero, so its payment links are added to your Xero invoices automatically. You keep invoicing in Xero, and the collections jobs above move into one place.
Direct debit mandates aren't tied to a fixed amount or date, so each collection uses the amount and due date of the invoice in Xero, and the client is told at least three working days before each payment. A failed collection is retried free, and if you switch it on, the client's saved card can be tried or a payment link sent instead. Hardware deposits and project invoices go out as payment links by email, SMS or WhatsApp, and every invoice is marked paid in Xero automatically.
Adfin's collection agents can send reminders by email, SMS or WhatsApp within rules you approve, with emails from your own address once Gmail or Microsoft 365 is connected, and you can pause chasing for the client you'd rather phone. Payouts arrive at the gross amount with fees billed separately, so there's no fee to net off when you reconcile in Xero.
Common questions
Can Xero send invoice reminders by text message? Xero's automatic invoice reminders are sent by email. If you want to chase by SMS or WhatsApp, you'll need a tool that works alongside Xero.
Can I take direct debit through Xero? Yes. Xero lets clients pay invoices by direct debit through GoCardless or Stripe, and other payment providers can also be added as payment methods.
Can I turn off Xero reminders for one client? Yes. You can switch reminders off for a particular contact or a particular invoice, while the rest of your clients stay on the schedule.
Does Adfin replace Xero? No. Adfin works alongside Xero with a two-way sync. Your invoicing and accounts stay in Xero, and Adfin handles collecting payment, chasing and matching payments to invoices.
How do I collect a direct debit when the invoice amount changes every month? Use a direct debit that takes its amount from each invoice rather than a fixed recurring sum, and make sure the client is told the amount and date before each collection.
Is it worth adding another tool if Xero is working? That depends on how much time goes on variable invoices, failed payments and chasing. If it's very little, Xero on its own may be enough for now.
Sources
- Xero UK - Send invoices online (accurate as of October 2026) https://www.xero.com/uk/accounting-software/send-invoices/
- Xero UK - Online invoice payments (accurate as of October 2026) https://www.xero.com/uk/campaign/online-invoice-payments/
- Adfin - Changelog (accurate as of October 2026) https://www.adfin.com/changelog
- Adfin - Getting started with direct debits (accurate as of October 2026) https://support.adfin.com/en/articles/10192945-getting-started-with-direct-debits
