Please keep in mind that we not accountants and we do not actually support Xero but we can provide you with little tips and tricks to make it easier for you


This article covers on how to transfer a Customer Invoice over to be a Supplier's Credit Note instead




For Warranty Service Jobs, your Warranty Company may elect not to pay the Dealership direct for the warranty work completed


The Warranty Company may instead elected to transfer the Customer  Invoice owing to the Dealership for Warranty work to be a Supplier's Credit Note instead


For example:

  • Dealership completed a Warranty Service Job for The Unit Company and the Invoice is currently sitting under the Xero Customer for The Unit Company as owing
  • The Unit Company are also a Supplier / Vendor and they want to convert anything owing to the Dealership (for Warranty Jobs) to be deducted from what the Dealership owes them as a Supplier / Vendor


However - Xero does not have the functionality to just press a button and the Customer Invoice is now a Suppliers Credit Note so we need to do a few steps for this process to work:


  1. Create a new Chart of Account as a Clearing account


In our example we have created a new liability chart of account called BP Warranty Clearing

If you already have a clearing account that you use on a regular basis, feel free to use it but just be aware that the Xero may need the clearing account to be a certain account type ie Current Asset for this to work


This is the new Chart of Account we have setup.  Note that the checkbox for Enable payments to this account is ticked




  1. Go to the relevant Customer Invoices for Warranty work and 'pay'  the relevant Customer Invoice to the BP Warranty Clearing account and as the Reference we would suggest the credit note number received




  1. Then create a Supplier Credit Note to that Supplier using the same BP Warranty Clearing account:

  


End Result:

  • The Customer Invoice has been 'paid' and is no longer sitting on the Customer Record in Xero as outstanding
  • There is now a Suppliers Credit Note sitting on the Supplier's account
  • The Clearing account should be zero - this is a good way to check if you have done it correctly.  After you have done your entries, the Clearing account must return to zero balance