What Is a Payment Run and How Often Should You Do One?
A payment run is a set time when a business pays all its approved supplier bills in one batch, instead of paying each invoice as it arrives. Most NZ small businesses run one weekly or fortnightly, with an extra run timed just before the 20th of the month, when most trade accounts fall due.
What a Payment Run Is
Instead of logging into the bank every time a bill lands, bills are entered and approved as they arrive, then paid together on a fixed day. In Xero, the batch payments feature lets you select every bill due before a chosen date and either pay them in one go or create a bank file to upload to your NZ bank. The person approving bills and the person releasing payment can be different people, which is one of the simplest fraud controls a small business can have.
How Often to Run One
| Frequency | Suits | Watch out for |
|---|---|---|
| Weekly | Businesses with lots of 7-day suppliers, or that want to catch every early payment discount | More admin; cash leaves the business in small, frequent amounts |
| Fortnightly | Most NZ small businesses; lines up with a fortnightly pay cycle | A 7-day invoice can go overdue if it lands just after a run |
| Monthly | Businesses where almost every supplier is on 20th-of-the-month-following terms | Anything on shorter terms goes overdue unless you pay it separately |
A practical NZ pattern: a main run around the 15th to 18th to clear everything due on the 20th, plus a smaller weekly or fortnightly run for anything on 7 or 14-day terms. See what the 20th of the month following means.
Worked Example
A Wellington joinery business has 14 suppliers. Eleven are on 20th-of-the-month-following terms and three (a courier, a hire company and a small hardware account) are on 7-day terms. It runs payments every second Thursday, plus a main run on the Tuesday before the 20th. Across October that's three runs instead of 30 or more separate payments, and nothing goes overdue.
How Payment Runs Affect Creditor Days
Your payment run schedule largely sets your creditor days. Runs that are too frequent pay suppliers earlier than needed and pull the number down; runs that are too far apart push invoices past their due dates and drive it up. If your creditor days are well above your suppliers' average terms, check the run schedule before anything else.
A Simple Payment Run Checklist
- Every bill entered and matched to a purchase order or delivery docket
- Bills approved by the person who ordered the goods
- Any changed bank account details confirmed by phone with the supplier, using a number you already have
- Credit notes applied before paying
- Remittance advice sent so suppliers can match the payment. See what a remittance advice is
Frequently Asked Questions
What does payment run mean on a supplier statement?
Usually that a supplier is telling you which of its payment runs your account falls into, or a buyer is telling a supplier when the next batch will go out. Either way it means a scheduled batch of payments rather than a one off transfer.
Can I do a payment run in Xero?
Yes. The batch payments feature lets you select several approved bills and pay them together, or create a bank file to upload to your NZ bank so all the payments go out at once.
What day of the week is best for a payment run?
Early to mid week. A Tuesday or Wednesday run leaves time to fix a failed payment before the weekend, and the money usually reaches the supplier the same or next business day.
How do payment runs prevent invoice fraud?
Batching gives you one fixed point to check bank account changes and approvals before money leaves. Fake change of bank account emails are a common scam, so confirm any new details by phone before the run.
