Financial Item → Reversing a supplier charge

Your tradesman sent you an invoice for £350, and you’ve sent this on to a property owner. They reviewed it and due to their large portfolio considered it all agreeable. However, what you were not aware of is that this property owner pays his tradesmen directly (not through the COHO platform).

Your team has, through no fault of their own, deduct £350 from the property owner in his most recently settlement and paid out his rent less the £350.

Context

We have the financial item below, a money movement to the tradesman directly from the client money account.

You can see the settlement that was created below.

STEP 1 → Create a reversal manually

Create an exact replicate of the financial item but tick the ‘Reversal box’ as shown below. You then put in all the exact same details as you did before including commission etc… so that reversals for those commissions are also generated.

If this reversal is only a partial reversal (in a scenario where perhaps the tradesman invoiced £500 in error instead of £450) then you can modify the amount of the invoice to reflect the amount you are reversing.

NOTICE: All the indications will state it is a reversal.

STEP 2 → Create a new settlement

You can either do this immediately, or wait to include this reversal with your next standard payment cycle. In this example we are doing it immediately so that we can see what kind of items are created with the XERO synchronization.

Here is the new settlement, notice an amount of £350 moves from the supplier to the property owner. As these items were set to go through the client money account the money movements do not involve the organisation.

STEP 3 - >Synchronize XERO and inspect

You can either manually kick-off XERO or wait for the synchronization to run itself. Then you can access XERO to check what items this reversal has created.

The original invoice charge and credit note, side-by-side:

The credit note itself, which you can offset against future payments to this supplier:

STEP 4 - >Decide what to do with credit note

The supplier now technically owed you that £350.00. If you have other invoices to this supplier you can use that money against those invoices - balancing out the client money account. This is shown below, you simply open up any bill-to-pay for this XERO contact and there is a button at the bottom of the bill-to-pay allowing you to pay it off from your credit.

However, if you do not have or expect to have further invoices from that supplie then you should of course get them to pay back the money to your client money account.

The way to do that is by telling XERO you expect to receive a cash refund for this credit note, as shown circled below. You would need to nominate which bank account the supplier will be paying the money into.