This article will guide you through the process of adding a credit memo into Xero for both a supplier and a client.
What is a Credit Note?
A credit note is a document used to reduce the amount of an invoice or bill. It can be created in Xero and then allocated to an existing invoice or bill to reduce the outstanding amount.
FOR SUPPLIERS
Prerequisite: create the return in Lightspeed and physically send the items to the vendor.
https://poolwerx.freshdesk.com/support/solutions/articles/13000107857-lightspeed-vendor-return-process
- Log into Xero and navigate to the dashboard
- Click on the Business tab and select Bills to Pay
- On the Bills page, click on green dropdown next to New bill and select New Credit Note
- Enter the details for the credit note (refer to the credit note fields section below for more information).
- Review the information, and when ready, click Approve to finalise the credit note.
- You can also email the credit note to your supplier directly from Xero.
- Once approved, you can apply the credit note to an outstanding bill.
- Go to the bill, and under credit Notes section, apply the credit note to reduce the amount due.
- If you've created the credit but have not yet received the bill, wait until the bill arrives, then open the credit note and click on Allocate Credit.
FOR CLIENTS
IMPORTANT
If you are creating a credit memo for a invoice created in Vital or LightSpeed, note that credit note application does not sync down to the other systems. You may be better off recording this as a void, which can be replicated across each systems, or recording it as an overpayment or preparement, depending on the situation.
- Log into Xero and navigate to the dashboard
- Click on the Business tab and select Invoices
- On the Invoices page, find the invoice you want to credit and open it.
- Click on the three ellipses and select Create and apply credit. This will create and automatically apply the credit to the selected invoice.
- You can also send an email copy to your client directly from Xero.
Alternative Method for creating a Client Credit Note
- Log into Xero and navigate to the dashboard
- Click on the Business tab and select Invoices
- Click on New Credit Note
- Enter the details for the credit note. (refer to the credit note fields section below for more information).
- You can also email the credit note to the client directly from Xero.
- Once approved, you can apply the credit note to an outstanding invoice.
- Go to the invoice and under credit Notes section, apply the credit note to reduce the amount due.
- If you've created the credit but have not yet created the invoice, wait until the invoice is created, then open the credit note and click on Allocate Credit.
Credit Note Fields
| Field | Description |
| Description | Enter a meaningful description of the credit note. For example, 'Credit against invoice 52146 dated 13 July 2017'. |
| Quantity | Quantity of the unit price to be applied, typically 1. |
| Unit Price | Enter the pre-tax amount of the credit note. Tax will be applied at the rate you select in the Tax field. |
| Account | Select the relevant account to post the credit note. |
| Tax Rate | Select the correct tax rate to apply to the credit note. |
| Outlets | Select whether this credit applies to a retail or service outlet. |
| Amount | Total amount of the credit note, including tax. |
Navigational directions
Automatically applying a credit to an invoice & approve to apply the credit note.
Creating a credit note
Allocating a credit after approval
------------------------------
SUPPLIER
Apply the credit to the next bill from the supplier.
- Go to the bill, and under credit Notes section, apply the credit note to reduce the amount due.
------------------------------
CLIENT
Note: credit notes do not flow from one system to the other. If you have applied a credit note in Xero, you have to manually apply a payment in Lightspeed. IMPORTANT: with payments this is different, payments flow from Xero to Lightspeed whereas Credits do NOT! Be very mindful of this when applying payments or credits to invoices.
After the credit note has been applied in Xero, go to Lightspeed and retrieve the invoice.
Click on the > before the invoice to open up the record.
Note that the balance is still be due.
Click on 'edit'.
Select 'add payment'.
Balance is 'zero'.
Because you've picked 'other method', it will not show up on the register close.
It will show you 'sync failed' but that's because Lightspeed can't sync this payment method with Xero.
