Welcome to our second part of our Xero Training notes!
In this blog, we will show you how to check to see if the debtors list is showing correctly in Xero. This is important because you may have amounts showing on your debtors list that have been paid already.
The first thing to do is to run an Aged Receivables Report. You can access this report from your Reports Tab.
This report can be run as at today, or with a historical date if you need to get a debtor figure as at year end, for example.
Review the list and consider:
- If all debtor amounts are correct and have not yet been paid
- If all debtor amounts are recoverable
If you find an amount on the debtors list that is no longer owing – it has been paid already, consider if:
- The bank feed with the debtor payment was coded incorrectly. Instead of being matched to the debtor, is it possible that you coded the bank feed to Revenue with GST? If so, you have double counted revenue. To fix this, find the original bank feed (best to do this using the report called Account Transactions) click on edit | Remove and Redo. Then, find the bank feed in your Dashboard, and match the feed to the correct debtor invoice. Remember if the debtor payment is not exactly the same amount as your original invoice, you can still match the payment.
- If the debtor payment is LESS than the original invoice, click on Match | Find and Match | put a tick next to the invoice you wish to mark as paid | Then click on the word split.
- Ensure the information is correct in the split transaction dialog box, then click on split again
- What will happen is that the bank feed will apply as a partial payment on the original invoice, with the remaining amount showing as owing.
- If the debtor payment is MORE than the original invoice, click on Match | Find and Match | put a tick next to the invoice you wish to mark as paid | Then click on New Transaction | Receive Money
- This will bring up a new dialogue box, click on the Received as ‘Direct Payment’ and change the drop down box to ‘Overpayment’. This will create a credit in your Debtor list that can be refunded to the customer or applied to a future invoice.
If you wish to write off the debtor amount you will need to create a bad debt expense. To do this follow these instructions:
- Create a new account, type expense, called Bad Debt Expense. You can do this from Settings | Chart of Accounts
- The Account Type will be Expense
- Tick the box that says ‘Enable Payments to this Account’
- Then, go and find the invoice you wish to write off. Click into the detail of the unpaid invoice and scroll down to the bottom of the screen. Put in your month/year end date and then choose the Bad Debt Expense account as the Paid To Account.
- Click on Add Payment
Your debtor list will be clean and accurate once you have removed all debtors that should no longer be listed.
Good luck! If you need any help please do call us at CloudCounting – you can reach us on 04 266 CLOUD.
The Team at CloudCounting