Managing Sales Invoices in Xero

Step-by-step guide to managing sales invoices in Xero

1. Create a New Sales Invoice

   • Go to Business > Invoices > New Invoice.
   • Enter:
     • Customer name (contact)
     • Invoice date and due date
     • Invoice number (auto-generated but can be edited)
     • Description of goods/services
     • Quantity, unit price, tax rate
   • Add tracking categories if you want to track by project, branch, or department.
   • Save as Draft, Awaiting Approval, or Awaiting Payment.

2. Customize Invoices

   • Go to Settings > Invoice settings.
   • Add your logo, branding theme, and terms & conditions.
   • Set default payment terms (e.g., Due in 30 days).
   • Enable online payments (Stripe, PayPal, GoCardless, etc.).

3. Send Invoices to Customers

   • From the invoice, click Email.
   • Use a default email template or personalize your message.
   • Attach PDF copy if needed.
   • Customers receive a secure link to pay online (if payment services are enabled).

4. Track Invoice Status

   • Go to Business > Invoices to view:
     • Draft (not yet approved).
     • Awaiting Approval (needs authorization).
     • Awaiting Payment (sent but unpaid).
     • Paid (fully settled).
   • Use the Aged Receivables Report to monitor overdue invoices.

5. Apply Payments

   • When a customer pays:
     • If using bank feeds, match the payment to the invoice during reconciliation.
     • Or manually record payment: Open invoice → Add Payment → select bank account, date, and amount.
   • Partial payments are supported (invoice will remain partially open).

6. Set Up Invoice Reminders

   • Go to Business > Invoices > Invoice Reminders.
   • Turn on automatic reminders (e.g., 7 days before due, on due date, 7 days overdue).
   • Customize reminder messages.

7. Credit Notes & Adjustments

   • To issue a credit: Open the invoice → Options > Add Credit Note.
   • Apply credit to reduce or cancel the amount due.
   • Refunds can also be recorded against the credit note.

8. 8Reporting on Sales

   • Use reports such as:
     • Invoice List (by status, customer, or date).
     • Aged Receivables (who owes you money and how long it’s overdue).
     • Sales by Item (track which products/services sell best).

Managing sales invoices in Xero isn’t just about raising and sending them. The advanced features allow you to streamline cash collection, improve branding, and automate compliance. Here’s the full breakdown:

Advanced Features of Managing Sales Invoices in Xero

Custom Branding & Templates

• Create multiple invoice branding themes (e.g., Standard, International, Premium Clients).
• Add logos, colors, custom headers/footers, and payment terms.
• Insert legal notes or disclaimers for industry compliance.

Online Payment Integration

• Add “Pay Now” buttons with gateways (Stripe, PayPal, GoCardless, Square).
• Offer multiple payment methods (credit card, bank debit, Apple/Google Pay).
• Automates receivables reconciliation when payments clear.

Recurring Invoices & Auto-Billing

• Set up recurring invoices for subscriptions, rent, or retainers.
• Enable auto-emailing and auto-charging via stored payment methods.
• Saves time and ensures consistent billing.

Invoice Reminders & Automation

• Configure automatic reminders for overdue invoices.
• Customize frequency and tone (gentle → firm).
• Reduces manual chasing and improves cash flow.

Multi-Currency Invoicing

• Issue invoices in customer’s currency.
• Xero automatically applies exchange rates and records FX gains/losses.
• Supports international business without manual conversion.

Partial Payments & Deposits

• Accept partial payments or deposits against invoices.
• Apply credit notes or overpayments to outstanding balances.
• Useful for project-based or milestone billing.

Inventory & Product Integration

• Link invoices with inventory items for stock tracking.
• Automates COGS (Cost of Goods Sold) entries.
• Add custom product/service codes, descriptions, and default pricing.

Tracking Categories & Dimensions

• Tag invoices by department, location, project, or sales rep.
• Run profitability reports by segment.
• Helps in deeper business insights.

Attachments & Supporting Docs

• Add contracts, delivery notes, or POs directly to invoices.
• Improves transparency with customers and speeds up approval.

Scheduled & Batch Invoicing

• Schedule invoices to be sent at a future date.
• Batch-create invoices for multiple customers at once (e.g., monthly membership fees).

Reporting & Insights

• Run Aged Receivables and Invoice Analysis Reports.
• Monitor average debtor days (DSO).
• Identify slow-paying customers and apply credit control policies.

E-Invoicing & Compliance

• Send Peppol-compliant e-invoices where supported (e.g., EU, Australia, NZ).
• Integrates directly into customers’ systems — faster payment cycle.
• Reduces errors and improves compliance with government standards.

Mobile Invoicing

• Use the Xero mobile app to issue invoices on-site.
• Accept instant payments via integrated gateways.
• Helps service businesses bill faster and reduce delays.

Tip: Combine recurring invoices + auto-payments + reminders for a nearly hands-free billing system — great for subscription-based or service businesses.