Once you have contacts entered into Xero, you can now create invoices for these customers. To begin, 1) click on Accounts from the blue menu at the top of your Xero screen and 2) select Sales from the dropdown menu.
This opens up a variety of options for you. Click the dropdown arrow next to New (below) and set up a new invoice by selecting Invoice.
A blank invoice will open up for you. While you enter a lot of information on this form, the invoice will only contain the information needed for your customer.
- Enter the name of your customer - you will notice that, as you begin to type, Xero will fill in the remainder of the name (if Xero does not do this, you have either a) not entered this contact, or b) misspelled the contact name)
- Enter the date of the invoice - today's date, if relevant.
- Enter the date the invoice is due - if both dates are today, just tab across both fields to the Reference and enter details of the invoice to help you recall the transaction. The Invoice # will default based on the last invoice created.
- Items relate to tracked and untracked inventory and will not be covered here.
- Enter the description of the sale, the quantity purchased and the unit price of each. Because the invoice is defaulted to Tax Exclusive, enter the pre-tax unit price and Xero will calculate the GST on the sale. (If GST is not charged, just use the drop down arrow to change the default to No Tax).
All that is left to complete this invoice is the 6) Discount % (in setting up this contact, you may have entered a discount that this contact ALWAYS receives - it will show up here automagically if that is the case). You can also manually enter a discount as well as the 7) Account that the sale will be recorded under. Click Save to save as a draft for follow up later OR Click Approve to approve the invoice and ready it for payment.
There are additional options when clicking the dropdown to the right of Save. You can just Save as draft, Save (continue editing) - particularly valuable if your internet is weak and at risk of cutting out. You can also Save & Submit for approval or Save & add another which brings up another invoice screen and saves you having to re-select New > Invoice.
Using the Save option is particularly important when junior or inexperienced staff are preparing the invoices and approval is needed before moving further.
In the event you are creating, approving and paying an invoice, you will want to use one of the Approve options. You can:
- Approve - the invoice is then moved to Awaiting Payments and ready for payment to be applied
- Approve and add another - if you are entering multiple invoices and want to do them all at once
- Approve and view next - you have multiple invoices that have been saved as Drafts and need to be approved
When you receive payment on the invoice, simply 1) Click Awaiting Payments, find the invoice you need to pay and 2) Click on the line representing the invoice
Xero will open up the invoice and provide you with the option to pay the entire invoice amount (defaulted) or a partial payment. You can see that the invoice, below, had previously received a partial payment and the remaining balance amount is defaulted. Simply confirm the amount, indicate the date of payment and the account to which the payment is being made (usually a bank account) and any additional reference you feel is important. Click Add Payment and you are done!