A chargeback occurs when a business needs to reclaim funds from a supplier due to issues such as under-supplied goods or damaged items. This situation can also arise if a subcontractor has been paid for incomplete work. This article outlines the correct process for handling chargebacks in Xero.
Steps to Process a Chargeback in Xero
Do not raise an invoice
A common mistake is to raise an invoice using the job number and cost center. This method is incorrect and will not reflect the chargeback accurately in actuals, therefore impacting the budget vs. actual financial/job reports.
Create a credit note.
Instead, raise a credit note for the supplier. Ensure that you include the relevant cost centre and job number in the credit note. This step ensures that the chargeback is correctly recorded.Apply the credit note.
The credit note can be applied to offset future invoices from the supplier or requested to be paid directly by the supplier.
By following these steps, the chargeback will be correctly captured in the Job Cost Summary report and Budget vs Actual comparisons within the G.J. Gardner Software.
If a Sales Invoice is required to be issued to the Supplier please follow the below steps:
Create an Invoice in Sales.
Ensure that you leave the relevant cost centre and job number blank. This can be entered in the Description for searching Purposes later.
Once the Invoice has been Emailed.
Please credit the Sales invoice in the open reporting period - (check the locked period dates). Then enter as a credit note in Bills with the Cost Centre and Job Number.
By following these steps, the chargeback will be correctly captured in the Job Cost Summary Report in Budget vs Actual Comparisons within the Financial tab for Jobs in G.J. Software.