Part 4 - Invoicing in Xero

This part follows from Part 3 - Creating Contacts in Xero.

Invoicing in Xero is easy and can be easily automated with software if you’re an online company. Actually, a fellow who I helped with bank reconciliations, used a piece of software he bought to automate all the invoicing in Xero from an ebay store that he owned. It meant he didn’t have to do any data entry for invoicing but rather, checked in to see how his sales were going. Comment below if you need a list of software that can be used to automate your invoicing.

Here’s how you can create a basic invoice in Xero:

  1. Go to Accounts > Sales > Click “+ New” and select Invoice.
  2. Enter your contact name in the “To” form, if you’re contact doesn’t exist yet, never fear, you can just use “+ New Contact” and that will create a new contact name for you. You can continue with creating the invoice.
  3. Fill out the other details. Things to note though:
    • The invoice # is automatically generated.
    • The reference field is optional but useful if you’re going through the general ledger trying to identify transactions. I would put something like - ‘sale from customer name for whatever it is that was sold’.
    • Click on the button that looks like this: to upload images/documents related to this invoice. For example, you may take a photo of a house and floorboards (if you’re invoicing for new floorboards, or receipts from the supply store).
    • Under “branding” drop down, you can choose the style of your invoice.
    • Chooose the tax to be applied on the invoice from the dropdown on the Amounts are field. Here’s what each one means:
      • Tax Exclusive - This means that number that you put in for each of the line items (look at the picture below for what a line item is), does not include tax. So if you say that line item 1 should have 10% GST applied to it, it will calculate the GST after the subtotal.
      • Tax Inclusive - This means that the number you put in for each of the line items with include whatever tax rate is there. So your subtotal with be the amount that includes the tax within it. The “tax” amount is just showing how much tax was included in the subtotal amount.
      • No tax - this means no tax is applied at all.
    • Enter in your line items details - this means what you’re selling. E.g. if you have more than one thing, say selling a chocolate box and a lolly bag, you’d put each one of these on a separate line. It’s a good idea to set up inventory for this so you can select stock that you’re selling. But you can complete your invoice without inventory too. In more detail:
      • Tracking is if you have things that you want to track like sales from a geographical location. Not really needed and is optional.
      • Account name/number - this is really important, you want to put your invoice into the right account because that way when you look at your financial report, the money you made for the sale is correctly categorised.
    • Once you’re happy with everything that you’ve filled out, click “Save”. This create a new invoice. If you only want a draft, click “Save as Draft”. Your invoice is now ready for the next stage…

How to Approve and Cancel Invoices:

  • Approving after saving, your invoice needs to be approved. Only those with appropriate access that enables “Sales only” or “Approve & Pay” can approve the invoice. To approve, just click the “Approve” button.
  • Cancel/Delete/Voiding - Click “Cancel” to cancel the invoice while your in the process of creating it. You can “Delete” a draft or invoice that is waiting for approval. You’ll need to “Void” an invoice that is approved and waiting for payment. If your invoice has been paid, you’ll have to remove that payment and then void the invoice.

How to Send an Invoice to a Customer (Snail Mail):

  • Go to Accounts > Sales > “Awaiting Payment” tab and check the box next to the invoice you want to send.
  • Click “Print” - if the invoice has not been marked as sent, click “Mark as Sent” and if the invoice has been marked as sent, click the “OK” button.
  • Click “Print Now” - a pdf shows and you can print this out and send it by snail mail to your customer.

How to Send an Invoice to a Customer (Email) - Your emails to customers can be sent directly from Xero so you can track when its be viewed and also send them a pdf attachment, here’s how to do it:

  • Go to Accounts > Sales > “Awaiting Payment” tab and check the box next to the invoice you want to send.
  • Click “Email” and enter the details needed to send off the email.
    • Choose the “Mark as Sent” box and the “Send me a Copy” so that you have your records.
  • Click “Send”.

Creating Repeating Invoices - a repeating invoice is useful if you want to automatically send out invoices for things have happen at a regular interval. For example, if you provide tutoring services to families each week, you could set up a repeating invoice to bill the family each week on a Friday. This means you set it up once, and then every week on a Friday the invoice for the same amount and service will go out to them. Here’s how you can set one up:

  • Go to Accounts > Sales > Click the upside down triangle near “New Invoice” and then click “New Repeating Invoice”.
  • Fill out the “Repeat this Transaction Every” with the interval. so, if you want to invoice to repeat every 2 weeks, enter 2 and then select “Week(s)”.
  • Click the circle on how you’d like the invoice to be saved as (1) Save as Draft (2) Approve (3) Approve for sending. I usually put “Approve for Sending” because once I save this repeating invoice I don’t need to do anything further and I can always edit it later if needed.
  • Fill out the other details like original invoice date (date you created the repeating invoice), due date for each invoice, optional “End date” - if the repeating invoice has to stop at some point, fill in all other details needed for an invoice.
  • Once done, click “Save”.

Creating Invoices for Contact Groups

  • First you’ll need a contact group. A contact group is where you group a bunch of contacts that are related. For example you might group the same families you see each week for delivering tuition sessions and name that group - “Weekly tuition families”. Don’t know how to create a group? This post will help you create a contact group in Xero.
  • In Xero, go to Accounts > Sales > Click the upside down triangle near “New Invoice” and then click the group you want to invoice under the “Invoice to contact group” heading
  • Complete the details for this invoice (refer above for details on completing an invoice)
  • Click “Create Draft Invoices” and then click all draft invoices and “Approve” button.

That’s a wrap for the most basic invoice creating.

Here are more posts if you do need to:
* Change an invoice through using a credit note - this post will talk about managing credit notes and how they can be used to formally change an invoice (as opposed to editing/deleting it - although that is easier)
* Recording payments for the sales invoices that you’ve made
* Manage the ‘health’ of your invoices and follow up on people that owe you money and outstanding invoices.
* Create a ‘quote’ instead of an invoice - really useful for tradies who are onsite and need to send people quotes for customised work.
* Sample invoices and customising your invoice design in Xero beyond just uploading a logo.

Now you can more onto Part 5 - Making Purchases in Xero

Next: How to Create Spend Money and Receive Money in Xero in 3 Steps

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