Add-on: Xero - Automatically reconcile credit notes

Use the Credit Note Offset feature in the Xero Add-on to automatically reconcile credit notes with the original invoice in Xero. This removes the need for manual matching and ensures accurate financial records.

What this feature does

When you enable this feature, Storeganise:

• Links the credit note to the original invoice
• Marks the invoice as "Paid via Credit Note" in Xero
• Skips payment syncing to avoid duplication

This gives you clean, automated financial records—without the manual work.

When to use it

Use this feature when:

• A customer cancels after you’ve already sent the invoice
• You want to offset the invoice using a credit note instead of issuing a refund

Before you start

To use this feature, make sure:

• The Xero Add-on is installed and active
• The invoice is in Sent status (not Paid)
• The credit note and invoice amounts match exactly (partial offsets are not supported)

Custom field setup

• The Add-on will automatically create two new invoice custom fields in your Storeganise instance:
• Title: Credit Note Type - where you can tag whether the credit note is a refund or offset
• Title: Linked Invoice / Credit Note ID - where you can add the invoiceID of the relevant invoice

Manual payment method

All users must create the following manual payment method in Storeganise:

• Name: Credit Note Offset
• Code: credit_note_offset

This method exists only to trigger the Xero allocation workflow—it does not represent an actual bank transaction.

Getting Started

Default behavior for unspecified Credit Note Types:

If you don't set a "Credit Note Type" when creating a credit note, the Add-on will automatically default to "Refund" processing when syncing to Xero.

This means:

• The credit note will process as a standard outbound payment in Xero
• No offset allocation will occur
• The Credit Note Type field in Storeganise remains empty, but Xero treats it as a refund

For offset processing:

To use the offset functionality described in this guide, you must explicitly set the Credit Note Type to "Offset/Write-off" - the default behavior will not trigger offset processing.

Step 1: Set up the credit note

1. Create a credit note in Storeganise with a negative amount (e.g. -$100)
2. Make sure the line items and account codes exactly match the original invoice
3. Set Credit Note Type to Offset/Write-off
4. In Linked Invoice/Credit Note ID, enter the original invoice ID
5. Mark the payment using the Credit Note Offset method
6. This action triggers the sync to Xero

Step 2: Update the original invoice

1. Open the original invoice in Storeganise
2. Set Credit Note Type to Offset/Write-off
3. In Linked Invoice/Credit Note ID, enter the credit note ID

What happens in Xero

• The Add-on uses Xero’s Allocation API to apply the credit note directly to the invoice
• The invoice status updates to Paid
• The credit note is applied automatically, so no open balance remains

Validations and error handling

If there’s an issue, Storeganise creates a task on the invoice with instructions to fix it. Examples include:

• Missing linked invoice or credit note ID
• Mismatched amounts

These are blocking issues.

Limitations

• Partial credit notes are not supported
• Automatic payments (e.g. Stripe, Cybersource) are not compatible
• Works only on invoices in the Sent status
• The feature is available for Xero integrations only

Need help?

Contact support@storeganise.com if you need assistance setting up or using this feature.