Our Xero integration allows you to post a summary of your sales data directly into Xero in the form of draft journal entries. Posting of individual invoices or client accounts is not supported, this information is stored in ChiDesk and can be accessed for any tax related queries.
- We currently support the Accrual method of accounting for this integration.
- The Xero integration is currently available as a Beta. Please ensure that values posted to Xero are reviewed by your accountant before they are posted in Xero.
Contents
What does the integration do?
Once activated, whenever a Cash Balance is saved you can choose to manually post this information into your Xero account.
Individual journal entries will be created for each Tax Type and each Service Type, Product Type, Membership, Course, Voucher and Custom sale.
- Course and Voucher sales are posted as liabilities in conformance with standard accounting practises.
- Tax on Course Sales is applied at the time of sale, as they meet the requirements for a product-specific voucher. No Tax is reflected on the redemption of the Course.
Along with sales, all receipts are also posted as Bank Transaction entries.
- Voucher, Course and Loyalty redemptions are posted as journal entries, as they affect the liabilities created on the sale or accumulation of these items.
Current Limitations
- Integration is a one-way push of data. If any changes are made that require the cash balance to be deleted, you will need to manually remove all journal entries for that cash balance.
- Upfront payments received are immediately posted to a Bank Account and Accounts Receivable.
- Expired Vouchers, Courses and Loyalty are currently not posted, these will need to be manually posted on a monthly basis.
Getting Started
Before you get started you need to setup your list of accounts in Xero to support the posting of journal entries. Xero does not allow journal entries against any of the system accounts, so you will need to setup new dedicated accounts for each of these in Xero in order to link them in ChiDesk.
Accounts
Setup accounts for Sales, Cost of Sales, Customer Control (Current Asset), Inventory Control (Current Asset), Discounts Allowed (Expense), Voucher Liability (Current Liability), Course Liability (Current Liability), Loyalty Liability (Current Liability) and cash up Discrepancies (Expense).
- You can optionally setup separate Sales accounts for each Service Type and Inventory Type created in ChiDesk to separate out your sales. You can also have separate Sales accounts for sales of Memberships, Courses, Vouchers and Custom items.
Payment Types
Xero recommends that you setup a Current Asset account for each Payment Type in ChiDesk and mark it as 'Enable payments to this account'. This will allow you to reconcile your bank statements with the posted amounts from ChiDesk.
So for instance, you will create a Current Asset called 'ChiDesk Credit Card' and the total credit card sales for a Cash Balance period would be posted to this account.
ChiDesk Setup
Navigate to Settings - Add-ons and select Xero.
- Click Connect on the action bar. This will redirect you to Xero where you can login and authorize access to ChiDesk.
- Once you have authorized ChiDesk via Xero, you will returned to this screen and your connection status should display as Connected.
- Select the Company you are integrating with from the drop-down.
- Click Save to save these settings.
Now navigate to Settings - Accounting Integration to map your accounts.
Sales
- Select a current asset account for Accounts Receivable.
- Select a sales account for Memberships.
- Select a sales account for redeemed Courses.
- Select a sales account for Vouchers.
- Select a sales account for Custom items.
- Select a sales account for each Service Type.
- Select a sales account for each Product Type.
- For shared Service Types, Product Types and Taxes, only a single account number can be selected. You can use Tracking Categories if you need to track sales based on a specific branch. In the Company field enter the desired tracking category and option as follows Name,Option. Ie. Branch,Cape Town.
Products
- Select an inventory control account.
- Select a cost of sales account.
Expenses
- Select an expense account for Discounts.
- Set an expense account for any Discrepancies between counted and expected amounts from the Cash Balance.
Liabilities
- Select a liability account for Courses sold.
- Select a liability account for Vouchers sold.
- Select a liability account for Gratuities received.
Taxes
- Map each Tax Type to a tax type in your accounting system.
Payment Types
- Map each Payment Type to a payment type account in your accounting system.
Journal Entries
Below you will find a detailed breakdown of the journal entries generated for the various financial transactions that take place in ChiDesk.
Sales
Debit: Accounts Receivable
Credit: Sales
Product Sales
Debit: Cost of Sales
Credit: Inventory Control
Sales Discounts
Debit: Discounts (Expense)
Credit: Sales
Loyalty Earned
Debit: Sales
Credit: Loyalty (Current Liability)
- Giving loyalty the client effectively reduces revenue, so we reduce Sales and add to the liability account.
Voucher Sales
Debit: Accounts Receivable
Credit: Vouchers (Current Liability)
Course Sales
Debit: Accounts Receivable
Credit: Courses (Current Liability)
Receipts
Debit: Payment Account (Current Asset)
Credit: Accounts Receivable
Voucher Redemptions
Debit: Vouchers (Current Liability)
Credit: Sales
- When a voucher is redeemed the value is divided evenly across all linked invoice items to reduce the credit to Sales from the normal Sales posting. This prevents a duplicate credit to Sales for the sale and redemption of the voucher.
Course Redemptions
Debit: Courses (Current Liability)
Credit: Sales
Loyalty Usage
Debit: Loyalty (Current Liability)
Credit: Accounts Receivable
- We have already reduced revenue when the loyalty is earned, so for a redemption we reduce our loyalty liability and apply the loyalty against the Accounts Receivable account to balance the sale.
Gratuities Received
Debit: Accounts Receivable
Credit: Gratuities Received (Current Liability)
Petty Cash Expenses
Debit: Petty Cash (Expense)
Credit: Payment Account (Cash)
Cash Balance Discrepancies
Debit: Discrepancies (Expense)
Credit: Accounts Receivable
Things to Check
Every time a Cash Balance is posted through to Xero your accountant will need to check the following:
- Under Manual Journal Entries you will find an entry for each of your Payment Types in ChiDesk. Vat should be set to No Vat, as Vat will accrue via the sales journal entries.
- Under Processs Journal Entries you will find all the sales and redemption journal entries. Ensure that the correct Vat treatment has been applied to these entries.
- If you are registered for Vat, you can use the Vat Transactions report to get a detailed view of how the posted journal entries have affected your input Vat.
FAQ
Can I post the actual client invoice into Xero instead of Journal Entries?
No. Posting individual client invoices would not support a number of accounting principles such as voucher, course and loyalty liability tracking and redemption etc. These would have to be posted manually as journal entries in any event, so instead we help create all required journal entries instead of individual invoices.
How can I reconcile what is posted into Xero with what is recorded in ChiDesk?
The best way for your accountant to check postings is to compare the daily manual journals with the matching Cash Balance report from ChiDesk. The Cash Balance report contains all required data that your accountant may require in order to double-check the created journals entries.
Some of my posted journal entries have no account set. How do I fix this?
This will occur if you attempt to map a posting to a restricted account in Xero. See the Getting Started section for a list of restricted accounts.
How do I disconnect from Xero?
Navigate to Settings - Add Ons - Xero. Click the Disconnect button to disconnect your account.