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How Does Clio Treat a Credit Note and VAT When an Invoice Syncs to Xero?

Question:

  • Clio Credit Notes that contain VAT and account is synced to Xero
  • How do invoices with Credit Notes sync to Xero?

Environment:

  • Clio Manage

Additional Information:

Answer:

In Clio, a Credit Note/Write-Off is treated like a payment, albeit a non-revenue-generating payment. Therefore, when a Credit Note is being sent over to Xero, you are given the option of accounts that can accept this form of payment.


You can only link Credit Notes to “Revenue” or “Asset” accounts. In terms of which account to connect your Credit Notes to in Xero, I can’t advise on that. It all depends on the mapping of everything else in your account and that would be a question for your Accountant, as they will be able to advise the best way to handle things, given the way Clio communicates with Xero.


Regarding the VAT that is charged, VAT in Clio is applied to the total amount on a Bill and because a Credit Note is considered payment in Clio, rather than deducting from the total on a Bill, the VAT is charged based on the Bill total, and then the Credit Notes are deducted from that.

The best to deal with this is to take the following steps:

When you do the credit note on the Clio side, you then have to disassociate that of the invoice in Xero, edit the credit note to say “tax-inclusive” and then reassign that back to the client/bill."

 

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