IMPROVED
Previous AP Process
bills and commissions paid ad hoc with no tracking or visibility
FIXED
Payment Method
structured batch payment file sent to client for fast, accurate processing
$6,000
Annual Fee Saving
bookkeeping transferred from tax agent at reduced cost
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INDUSTRY:
Financial Services — Mortgage Broking -
ISSUE:
No accounts payable process, commission payments and bills paid ad hoc from the bank, missed payments causing supplier and broker dissatisfaction -
OUTCOME:
Structured AP process implemented, ABA payment file established, $6,000 per year saved in bookkeeping fees
The situation
The owner of this mortgage broking business was running the business well from a client-facing perspective — writing loans, managing broker relationships, and building a pipeline of referrals. The part of the business that was not working was the financial administration. Specifically, accounts payable had no structure at all, and the consequences of that gap were beginning to affect the business’s most important relationships.
A mortgage broking operation has a particular accounts payable profile. There are two distinct categories of outgoing payment that must be managed with accuracy and consistency: broker commissions — payments owed to the brokers whose loan settlements generate income for the business — and standard supplier bills such as software subscriptions, professional memberships, insurance, and office costs. Both need to be paid on time, to the right party, in the right amount, and with a clear record of what was paid and why.
None of that was happening.
Payments were being made directly from the bank account as they came to the owner’s attention — which meant some were paid on time, some were paid late, and some were missed entirely. There was no way to see at any given point what was outstanding, what had been paid, or whether broker commissions had been calculated and distributed correctly.
For the brokers relying on timely commission payments, this was not an acceptable situation.
What we found
1. No accounts payable processes were in place
Acting as their bookkeeper we reviewed how payments were being managed, there was no accounts payable system in place in any meaningful sense. Bills were not being entered into the accounting software when they arrived. Commission obligations were not being recorded as liabilities as they fell due. There was no aged payables report, no payment schedule, and no visibility over what the business owed at any point in time.
The owner was effectively managing payments from memory and from whatever arrived in the email inbox on a given day. This approach works adequately for a very small sole trader with a handful of regular suppliers and no staff or contractors to pay. For a mortgage broking business with multiple brokers receiving commissions at varying rates and timings, and a full set of operational expenses to manage alongside, it was not a viable system — and the results reflected that.
Missed payments had already created friction with suppliers. More significantly, broker commission payments that had been delayed or incorrectly calculated had created dissatisfaction among the brokers the business depended on to generate settlements. The owner was aware that this was a problem but did not have the time or the system knowledge to fix it. Managing payments was taking time away from the client-facing work that actually drove revenue, and it was still being done poorly.
2. No record of what had been paid or to whom
Because payments were being made directly from the bank without being entered into the accounting software first, there was no reliable record within the accounts of what had been paid, when, and to whom. The bank statement showed outgoing payments, but without corresponding entries in the software there was no way to match those payments against specific bills or commission obligations, verify that the correct amounts had been paid, or identify anything that had been missed.
This had practical consequences beyond the immediate payment management problem. Without a clean accounts payable record, the bookkeeping itself was harder to maintain — the bank reconciliation had to account for payments that had no corresponding entries, and the expense records were incomplete. It also meant that the business could not produce a reliable picture of its cost base at any given time, which limited the owner’s ability to understand the profitability of individual broker arrangements or the business overall.
3. Bank reconciliation managed by the tax agent but without a full bookkeeping service
The business’s tax agent was handling BAS lodgements at a cost of $500 per month. That was the full extent of the financial administration support in place. The accounts payable function such as entering bills, tracking commission obligations, and managing payments was falling entirely on the owner, who was doing it without a proper system and without the time to do it well.
When we took over the bookkeeping, we implemented the full accounts payable process in Xero alongside the bank reconciliation and BAS preparation. The result was a complete, end-to-end bookkeeping service covering everything the business needed which included structured AP management, accurate payment processing via ABA file, bank reconciliation, and BAS lodgement.
The fee for this consolidated service remained at $500 per month — exactly what the client had been paying the tax agent for BAS lodgements alone.
The difference is that the owner now receives a complete bookkeeping function for that same cost, rather than a single compliance task with no accounts payable support. The hours the owner had been spending managing payments manually (and the errors and missed payments that came with it) were eliminated entirely at no additional cost to the business.
In a broking business, commission payments are not simply a financial obligation — they are a relationship obligation. A broker who is paid late, paid incorrectly, or not paid at all does not stay with the business. The absence of a structured accounts payable process in this case was not just an administrative problem; it was a direct risk to the business's income-generating relationships.
What we did
Building an accounts payable process in Xero
The foundation of the solution was implementing a formal accounts payable process within Xero. This involved establishing a clear workflow for every payment the business needed to make — from the point at which a bill or commission obligation was identified, through to the payment being made and recorded.
Every bill is now entered into Xero when it is received, creating a liability in the accounts and an entry in the aged payables report. Commission obligations are entered as they fall due, with the payee, amount, and due date all recorded. The owner — and we, on their behalf — can see at any point exactly what is outstanding, what is overdue, and what is due in the coming days or weeks. Nothing is managed from memory or from an unstructured email inbox.
ABA payment files for fast and accurate batch payments
For the payment step, we implemented an ABA file process. An ABA file — named after the Australian Banking Association format — is a batch payment file that can be generated directly from Xero and uploaded to the business’s internet banking platform to process multiple payments simultaneously. Rather than logging into the bank and entering each payment individually, the owner receives a single file from us, uploads it to their banking platform, and approves the batch in one action.
This approach has several significant advantages. It is faster — a batch of ten or twenty payments takes the same time to approve as a single payment. It is more accurate — the payee details, amounts, and references are pulled directly from the bills entered in Xero, eliminating the risk of manual keying errors in the banking platform. And it creates a clean, auditable link between the bills in the accounting system and the payments made from the bank, which simplifies reconciliation and gives the owner a complete record of every payment made.
For broker commissions specifically, the ABA file process means that commission payments go out on a consistent schedule, for the correct amounts, with the correct payment references — every time. The friction that had been building in broker relationships due to late or incorrect payments was resolved as soon as the system was in place.
Taking over the bank reconciliation
Alongside the accounts payable work, we took over the bank reconciliation from the tax agent’s bookkeeper. With bank feeds configured directly into Xero and the accounts payable process now producing properly recorded payment entries, the reconciliation process became significantly more straightforward. Transactions that previously had no corresponding entries now match automatically against the bills and commission payments entered in the system.
The result was a cleaner, faster reconciliation process delivered as part of a single integrated bookkeeping arrangement — and a reduction in the total fee being paid for bookkeeping from what the client had been paying the previous provider.
The outcome
Issue Identified | Resolution & Outcome |
No accounts payable process — bills and commissions paid ad hoc from the bank | Full AP process implemented in Xero; all bills and commission obligations entered and tracked as they arise |
No visibility over outstanding payments or what had been paid | Aged payables report live at all times; owner has complete, current visibility over all outstanding obligations |
Broker commission payments delayed or incorrect, creating relationship damage | Commissions processed on a consistent schedule via ABA file; payment accuracy and timeliness fully restored |
Missed supplier payments causing friction with service providers | All bills entered and scheduled on receipt; no payments missed since AP process implemented |
Payments made directly from bank with no corresponding accounting entries | ABA file process links every payment directly to its bill entry in Xero; reconciliation now clean and straightforward |
Bank reconciliation handled by tax agent’s bookkeeper at $500 per month | Reconciliation consolidated into single bookkeeping arrangement; saving of $500 per month — $6,000 per year |
Owner spending significant personal time managing payments — still making errors | Owner’s role reduced to approving a single ABA file; no manual payment entry required |
Why having strong bookkeeping processes is so important to a broking business
Mortgage broking is a relationship-driven industry. The brokers who write loans through an aggregator or principal business are not employees — they are typically independent contractors who choose where they place their business based on a combination of commission rates, support, and how reliably and fairly they are treated. A business that cannot consistently pay its brokers correctly and on time is a business that will struggle to retain them.
The same principle applies to the supplier side of the business. A mortgage broking operation depends on a set of technology platforms, professional services, and compliance tools to function. Suppliers who are routinely paid late or who have to follow up outstanding invoices are suppliers who become less responsive, less flexible, and eventually less willing to maintain the relationship. The reputational cost of poor payment practices compounds over time and is harder to repair than it is to prevent.
The underlying cause in this case was not a lack of intent — the owner understood the importance of paying people correctly and on time. The cause was a lack of system. Without a process that made it easy to see what was owed, to whom, and by when, and without a payment mechanism that made acting on that information fast and accurate, even a diligent business owner was going to miss things. The system we implemented removed the friction from the payment process entirely, and the owner’s time was freed up to focus on the parts of the business only they could do.
The ABA file is one of the most underused efficiency tools available to small and medium-sized businesses in Australia. It takes the same amount of time to approve a batch of thirty payments as it does to approve one — and every payment in that batch is drawn directly from the accounting software, which means the records and the bank are always in alignment from the moment the file is uploaded.
Key Takeaways for business owners
- If your accounts payable process consists of paying bills as they come to your attention, you do not have an accounts payable process. You have a reactive payment habit — and it will produce missed payments, reconciliation problems, and supplier friction over time.
- In a business that pays brokers, contractors, or commission-based referrers, payment accuracy and timeliness are relationship-critical. A structured AP process is not an administrative nicety — it is a retention tool.
- ABA batch payment files, generated from Xero or MYOB, allow multiple payments to be approved in a single banking session with amounts and payee details drawn directly from the accounting software. For any business making five or more payments per week, this is worth implementing immediately.
- If your bank reconciliation and your accounts payable are being managed by separate providers, consolidating them into a single bookkeeping arrangement will almost always produce a cost saving and a cleaner set of accounts.
- The time a business owner spends managing payments manually is time not spent on client-facing work. In a service or broking business where the owner’s time is the primary revenue-generating asset, the cost of that distraction is significant — and entirely avoidable.
Is Your Business in a Similar Position?
If you are concerned about the accuracy of your current bookkeeping, have unreconciled accounts, or simply are not sure whether your financial records are in the condition they should be, we offer a free initial consultation.
We will assess your current situation honestly and give you a clear picture of what needs to be done.
