Correcting Overstated Revenue in Xero Due to Lightspeed Store Credit Workaround

Jayde Wood

Modified on: Thu, 15 May, 2025 at 3:16 PM

This guide provides instructions on how to correct overstated revenue in Xero that resulted from a workaround used in Lightspeed during the early migration period.

Background

During the early migration period, a workaround was used in Lightspeed to correct any incorrectly store credits to align credits in Xero. While Lightspeed provides a workaround to correct this, it unfortunately posts to Xero as revenue. This potentially and incorrectly inflates both BAS obligations and franchise fees.

For anything related to Franchise Fees, please reach out to the Finance Team for assistance. The following process is required to correct the inflated revenue, and correct any potential BAS filings.

Step-by-step Instructions

1. Void Store Credit Journal

This journal was created by Lightspeed to increase the store credit liability and expenses account for the manually issued store credit. To do this:

In Xero, navigate to Accounting > Chart of accounts
Search for Store Credit in the search bar
Click the YTD number to open the account's transaction history (it doesn't matter if it's the liability or expenses account).
Locate the transaction and open the record
Click Journal Options > Void.
It will prompt you to confirm; click OK. This will void the journal.

2. Delete the Payment Record

This "payment" was created within Xero to offset the invoice and does not correspond to actual money in the bank. Deleting it is necessary because it further reduces the store credit liability account.

To do this:

Open the Register Closure invoice in Xero. You can navigate to this from the register closure summary in LightSpeed.
The payment amount for the "store credit" type will be an invoice line item, and a payment reflecting the same amount will be applied to the invoice - shown in the image below as an example.
Open the payment record
Click Options > Remove & Redo. This will remove the payment record from Xero.

3. Credit and Apply a Credit Memo

Create a credit memo dated the same date as the register closure invoice and apply it to the register closure invoice. Due to the invoice being linked to a register closure and includes other revenue, it cannot be voided. This credit memo will bring the invoice balance to zero.

To do this:

Open the Register Closure invoice in Xero. You can navigate to this from the register closure summary in LightSpeed.
The invoice should have an outstanding balance due to the deleted payment record.
Click the three ellipses menu icon, and select Create and apply credit.
Amend the date to be the same date as the register closure invoice.
Ensure the amount (unit price) is correct.
Ensure the Account and tax rate matches the register closure invoice line item.
Click Approve.
Once you've approved the credit note, you'll be taken back to the invoice, showing the amount credited. The remaining balance should be 0.

Frequently Asked Questions

Q: What if the GST reporting period for the original invoice has already passed?

Still use the original invoice date when creating the credit memo. The GST component will be included in the next GST quarter under "unfiled amounts."

Q: How do I know which Account and Tax Rate to use for the credit memo?

Use the same Account and Tax Rate as the original invoice. For example, if the original invoice used "4000-000 Sales" and "GST Free Income," use those same settings for the credit memo.

This process will help correct the overstated revenue in Xero, ensuring your financial records are accurate. If you encounter any issues or have questions, please reach out to evolution@poolwerx.com.au.