This article will cover how to transfer a Customer Invoice over to be a Supplier's Credit Note instead in Xero
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 you will need to do a few steps for this process to work:
Xero - How to Transferring Customer Invoice over to be a Suppliers Credit Note
- Create a new Chart of Account as a Clearing account
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
- 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
- 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.