This guide covers:
What happens in Xero when you collect a payment without an invoice
Advanced options for syncing payments to Xero
How VAT is applied
What happens in Xero when you collect a payment without an invoice
If you collect a payment in Adfin using a payment line, payment schedule, or the payment portal, and you have Xero connected, the payment can be synced to Xero.
Default behaviour
The payment is synced to Xero as a Receive Money bank transaction
The transaction is created in the Adfin clearing account
It is linked to the relevant customer
The payment is coded to your Sales (200) revenue account in Xero
Once synced, you can allocate the payment in Xero as needed (for example, against a future invoice).
Advanced options for syncing payments to Xero
You can customise how payments are synced using the advanced settings in your Xero configuration.
Turn off payment syncing
You can disable payment syncing entirely. If you do this, Adfin will not create any payment or transaction in Xero when a customer pays.
Change the payment type
Instead of a Receive Money transaction, you can choose to sync payments as:
Overpayments
Created as an Overpayment in Xero
Treated as a liability
Easy to allocate against a customer when you raise an invoice
VAT cannot be included
Prepayments
Created as a Prepayment in Xero
Also treated as a liability
Easy to allocate when raising an invoice
VAT can be specified
Choose a different account
You can also choose which Xero account the payment is coded to.
The list of available accounts will depend on the payment type you select.
How VAT is applied
If you sync payments as a Receive Money transaction or Prepayment, you can choose:
Whether VAT should be applied
Which VAT rate to use
Important notes about VAT
The VAT setting applies to all payments synced to Xero
All customer payments are treated as VAT-inclusive
Example
If a customer pays £22 and you sync the payment with a 20% VAT rate, Adfin will create the transaction in Xero as:
£20 net
£2 VAT
My payments are sitting in the clearing account and aren't allocated in Xero
This is expected, nothing has gone wrong. A payment with no matching invoice posts to your Adfin clearing account in Xero once it settles. It's recorded against the customer, but it isn't allocated to an invoice, because there's no invoice to allocate it to.
The allocation step happens in Xero. Depending on your sync settings, the payment arrives as a Receive Money transaction, an overpayment, or a prepayment, and you allocate it from there, either against an invoice or the customer's balance. One thing to note: allocations you make in Xero stay in Xero, they don't sync back to Adfin.