This process is straightforward as applying an Overpayment or Prepayment in Xero automatically updates the corresponding invoice in LightSpeed, and the invoice status in Vital will update to 'paid' if no outstanding balance remains.

1. In Xero, locate the relevant overpayment or prepayment. You can do this from your your Aged receivable detail report, or directly from the customer's account details. 
2. In the top right-hand corner of the overpayment transaction, click on Overpayment options.
3. From the dropdown menu, select Allocate Credit
   
4. A list of open invoices on the customer's account will appear. Enter the credit amount to apply to each invoice.
5. Click Allocate Credit.
   
   
    

Expected Outcome: The Overpayment / Prepayment will auto-update the invoice in Lightspeed and will appear in the payment section referenced as a 'Xero credit note'. If no further balance is outstanding, the invoice status in Vital will show as 'paid'.

When a Xero Credit Note is applied to an invoice, it does not automatically update Lightspeed. A manual adjustment in Lightspeed is required.

Step 1: Create and Apply Credit in Xero

1. Log into Xero and navigate to the dashboard.
2. Click on the Business tab and select Invoices.
3. On the Invoices page, find the invoice you want to credit and open it.
4. Once on the invoice, click on the three ellipses (...) and select Create and apply credit. 
5. Expected outcome: This will create and automatically apply the credit to the selected invoice in Xero. You can also send an email copy to your client directly from Xero. 
6. Alternatively, you can create an stand alone Credit Note and apply it to an invoice later. To do this:
   1. Log into Xero and navigate to the dashboard.
   2. Click on the Business tab and select Invoices.
   3. Click on New Credit Note
   4. Enter the details for the credit note. You can also email the credit note to the client directly from Xero
   5. Once approved, you can apply the credit note to an outstanding invoice. 
   6. Go to the invoice and under credit Notes section, apply the credit note to reduce the amount due.
      Conditional logic: If you've created the credit but have not yet created the invoice, wait until the invoice is created, then apply it.

Step 2: Manual Adjustment in LightSpeed

This process is essential to mark the sale as 'completed' in Lightspeed so that the status of the invoice will update to 'paid' in Vital.

1. Create Non-tracked inventory product (if applicable): 
   1. In LightSpeed, create an non-tracked inventory product called 'Xero credit note' . Alternatively if the credit note relates to a bad debt write off, we recommend creating a product labelled 'bad debt write-off".  
   2. Optional: add a tag "Xero credit note" or "Bad debt" for better seachability.
      
2. Navigate to the invoice via the Sales History. Ensure you are logged in to the correct register. If not, switch registers.
3. Click Continue sale. If you cannot click Continue Sale, you are most likely not in the correct register.
   
4. Add the Xero Credit note item to the sale
5. Enter quantity of Negative 1 (-1).
6.  the total value of the credit or write-off. Note: The outstanding amount should be equal to the amount in Xero.
7. Click the Pay button.
   
8. Select Cash.
   
9. Select Complete Sale.
   

Manual Tracking (Google Sheet)

Maintain a live, shared Google Sheet for all clients with Xero credit balances. This sheet serves as a centralised, accessible record for staff who do not have direct Xero access. For detailed instructions and a template see: Client Credit Tracking Sheet.

Tagging and Notes in the Field Management System

To ensure field technicians and schedulers are aware of Xero credit balances, apply relevant tags (e.g., "credit balance" or "Has credits" to the client's profile in Vital.

Add detailed notes to the client's profile outlining the credit balance, its origin, and any specific instructions for application. This practice is crucial for preventing double-charging or miscommunication during service visits.