This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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Fixed-price agreements are either billed from Xero or from Practice Ignition. We will look at Practice Ignition in more detail in the next section, but here we want to focus on setting up fixed-price agreements using just Xero and XPM.
We will first look at how invoices sync from Xero to XPM, then look at best practices on how we set these up to ensure end-of-year rollover is as seamless as possible. At the end of this section we will look at what to do if invoices have not been synced correctly from Xero to XPM.
Understanding the invoice sync with XPM
When we create an invoice in XPM, the invoice gets sent to Xero via the API. This happens immediately once the invoice is approved in XPM. We can also send invoices in the other direction, ie. from Xero to XPM. This is what we do for our fixed-price agreements. It’s not quite as straightforward when sending invoices from Xero back to XPM because we don’t just create an invoice, we also need to match the invoice to the appropriate job.
We have two ways of matching the Xero invoice to the appropriate job in XPM. We can add the job number to the ‘Reference’ field in the Xero invoice, or we can add the ‘Client Order Number’ to the reference field. The client order number is a field within the job in XPM. When the invoice is created in Xero, the invoice will sync to XPM by checking to see if the reference field of the invoice matches either a job number or client order number in XPM. It’s important to note this does not happen immediately when the invoice is created. It will happen overnight.
We will be setting up repeating invoices in Xero, and matching the reference numbers of the invoices with the job numbers or client order numbers with the appropriate jobs. Each month when the invoices are created, new invoices will be created against the jobs in XPM as interim invoices.
Setting up the invoice sync with XPM
Our objective is to capture 12 monthly invoices from Xero against their respective jobs in XPM. So when the first invoice is created, we want to have a job set up ready to capture the invoice. We can then leave this on autopilot throughout the whole financial year as each new invoice that is created will automatically sync to the correct job in XPM. Once we reach the end of the financial year, however, we will have 12 invoices on the job so we need to consider what we do with the next invoice.
At the beginning of the new financial year, we need the next invoice that is created to be matched against the next year's job. We do this by directing the next invoice to the new job. If we have used the job number, we will need to update all the Xero repeating invoices with the new job number in the reference field. If we used a client order number, we would need to update all the jobs to move the client order number from the old job to the new job.
So which option is best? This is up to you, but the client order number is easiest. The client order number is generally the client code. So for ABC Limited, the code might be ABC100. Once the 12 invoices have arrived against all the fixed-price agreement jobs, you can click into each client in XPM and open up their active jobs. You will have one for this year, and one for next year. Open up both jobs and edit them. Cut the client order number from the old job, and paste it into the new job then hit ‘Save’ on both jobs. It is important to ensure the client order number only exists in one job, otherwise Xero will get confused as to what job to send the invoice to.
If you would prefer to use the job numbers as the matching mechanism, at the start of each new financial year open up all your repeating invoices in Xero and update the reference in the invoices from the old job number to the new job number. You only need to choose one of these methods. You are either updating your client order number inside the jobs in XPM, or updating the job number in the reference field of the Xero invoices. Never both.
Repeat this for each client you have on a fixed-price agreement. When the next invoices are created in Xero, the invoice will sync to the new job to match to the new client order number (or job number). This is something you will do each new financial year if you are on the in-advance or in‑period fixed-price agreement methods, and once a month for the relevant clients that are on the contract-period method.
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