Xero how to
How to reconcile a refund in Xero
Xero has no negative payment, so a refund becomes one of two document sets. Money handed back before it was ever applied to an invoice is released from the held credits liability, and no revenue and no tax move. Money that had already been applied needs a credit note on the original line's tax rate, then a refund payment against that credit note.
Key facts
- What the practice system records
- A negative payment, entered as a negative number in the payment source field matching the amount refunded1
- What Xero has instead
- Either a release of money still held, or a credit note plus an applying payment, which is the document set the canonical template names for each case9
- Money never applied to a supply
- Released from account 245, Customer deposits and credits held, which is BAS excluded, so nothing needs to be untaxed9
- Money already applied
- A credit note on the original tax type, then a payment against the credit note, which is the same pair as any other reversal of revenue9
- A refund spanning both
- Raised as a question with both candidate postings shown, rather than posted on a guess9
- What syncs
- PracSuite states plainly that refunds are not included in the Xero sync and have to be adjusted in Xero by hand6
- Credits in the practice system
- Cliniko credit allocations do not appear in Xero, and an invoice paid by account credit stays open in Xero2
- Archiving the invoice instead
- Archiving an invoice in Cliniko archives the payments attached to it, which is a different event from a refund3
- Why editing the invoice fails
- Xero answers with a document that cannot be edited because it has a payment or a credit note allocated to it4
- Why an oversized payment is refused
- Overpayments are not permitted by Xero, so excess cannot ride on the invoice payment7
Why there is no negative payment in Xero
At the front desk a refund is one action. In the practice system it is often recorded as a payment with a minus in front of it. Cliniko says so in as many words: put a negative number into the payment source field, matching the amount being refunded. That is a clean record of what happened at the counter, and it has no equivalent object in Xero.
Xero has payments, credit notes, overpayments and prepayments, and a payment cannot carry a negative amount. So a refund has to be expressed as something Xero already understands, and which one is not a matter of taste. It follows from one question about the money itself.
The one question that decides the posting
Ask whether the money being handed back had ever been applied to an invoice. Everything else follows from the answer, because applying money to an invoice is the moment it stops being a liability and becomes revenue.
- Money still held, never applied: a session pack the patient stopped using, a booking fee for an appointment that never happened, a deposit taken and then returned. Nothing was ever taxed, so nothing needs to be untaxed.
- Money already applied: a gap paid twice, an invoice paid in full that a funder later settled as well, a session billed and then reversed. This is ordinary revenue, so reversing it takes a credit note on the same tax rate the original line carried.
- Both at once: part of the refund covers held money and part reverses a paid invoice. There is no single obviously correct posting, so this one is a question rather than an entry.
The canonical allied health template states these three cases as rules with a reason on each, so this page names them rather than describing a habit.
Refunding money that was never applied
Money taken before the service it pays for has been delivered is a liability, not income. The canonical templates hold it in account 245, Customer deposits and credits held, posted BAS excluded so it stays out of the sales figure until it is applied, forfeited or handed back.
Refunding it is one document. The money leaves the bank account and the liability falls by the same amount. No invoice is touched, no credit note is raised, and the revenue accounts do not move, because the money never reached them. The bank statement line then matches that single document, which is what makes the reconciliation a one line job rather than an investigation.
Refunding an invoice that was already paid
Once the money has been applied to an invoice it is ordinary revenue, and reversing revenue takes the same document pair as any other reversal: a credit note, then a payment against it. The credit note carries the same account and the same tax rate as the line it reverses, so the reversal lands in the same place the sale did.
For a private clinical session in the allied health template that is account 400, Clinical services, private patients, at the tax rate the original line carried. For a product sale it is the products account at its own rate. Copying the original line rather than picking a rate is what keeps a refund from quietly changing the tax on a sale that was already reported.
Editing the paid invoice instead does not work, and Xero says why. The practice system reports the answer back as a document that cannot be edited because a payment or a credit note is allocated to it. That is not a sync fault. It is Xero protecting a reported sale, and the credit note is the way through it.
The refund that spans both
A patient who paid for a block of sessions, used two, and asked for the rest back is refunding held money and reversing revenue in one transfer. Pushing the whole amount through the liability understates the reversal of the two sessions that happened. Pushing it all through a credit note reverses revenue that was never earned.
The canonical template does not resolve this one. It says to raise a question with both candidate postings shown, because a partial refund spanning held and applied money has no single obviously correct answer. In practice that means splitting the refund on the amounts each part covers, and having somebody who knows the arrangement say which is which.
If you do allocate a credit in Cliniko though, you need to also hop over to Xero and apply the credit manually yourself so that your information in both software is consistent and accurate.8
Which account the money leaves from
The second half of the entry is where the money physically went. Most patient refunds leave the operating bank account, and the bank line is what you match. A card refund put back through the same terminal can come out of a later settlement instead, so it reduces a deposit rather than creating a withdrawal of its own.
Cliniko describes its payments as debits pushed into the clearing account, with reconciliation being the work of zeroing those debits out against the money arriving in the bank. A refund netted out of a settlement has to move that same account in the opposite direction, or the balance carries a residue nobody can name.
| How the money came in | How the refund goes out | What you match |
|---|---|---|
| Bank transfer or cash at the desk | An outgoing payment from the operating bank account | One outgoing bank line against one document |
| Card at the terminal, banked as a settlement | Taken back out of the clearing account the takings went into | The settlement, with the refund posted as its own document rather than folded into the match |
| Held credit taken earlier and never applied | A release of the held credits liability | One outgoing bank line, with no invoice and no credit note involved |
| A funder settlement that arrived after the patient had paid | A credit note on the patient invoice, refunded from where the duplicate sits | The refund against the account holding the duplicate money |
One refund, read twice
The after column is not tidier for its own sake. Every line is a balance somebody can explain in a sentence, which is the test a refund passes before a BAS is lodged on top of it.
What your practice system sends, and what it does not
Most of the pain here is not the Xero entry. It is that the reversal does not arrive. PracSuite states it outright: refunds are not included in the Xero sync, and a refunded payment has to be adjusted in Xero by hand. Cliniko says credit allocations will not appear in Xero at all, and that an invoice paid by account credit syncs across but stays open on the Xero side until somebody records the payment there.
Zanda's export screen lists only invoices that still exist in Zanda, so a deleted invoice tells you nothing about whether its counterpart in Xero is still standing. Archiving an invoice in Cliniko archives the payments attached to it, which looks like a reversal from inside the practice system and leaves the Xero side untouched.
That is why receivables and clearing balances drift. The sale syncs and the unwind does not, so each refund widens the gap until somebody reconciles by hand. A clearing balance that will not clear is the other half of this, and reconciling the clinic bank account is where the outgoing line gets matched.
The messages you will see, and what each one means
Four outcomes cover most of what goes wrong when a refund is pushed at Xero the wrong way round, and the fourth of them is silence. Each names a different mistake, so reading it beats trying combinations.
| What you see | What it means | What clears it |
|---|---|---|
| This document cannot be edited as it has a payment or credit note allocated to it | The invoice is closed, so the refund cannot be made by editing it | Leave the invoice alone and raise a credit note against it, or remove the payment first |
| Payments can only be made against Authorised documents | The document the payment is aimed at is still a draft or has been voided | Authorise the credit note before posting the payment against it |
| Overpayments are not permitted by Xero, meaning payments more than the invoice amount | The refund was sent as part of an invoice payment larger than the invoice | Carry the excess as its own credit balance instead of loading it onto the invoice payment |
| Nothing at all, and the Xero invoice stays open | The practice system refunded or credited without sending anything across | Post the document set in Xero by hand, dated the day the practice system used |
Neighbouring documents that are not this one
Three things sit close enough to a refund to be mistaken for it. A credit note on its own reduces what a patient owes without any money moving, and reconciling a credit note covers that. An overpayment is money received above an invoice total, which has its own refund path on reconciling an overpayment.
A refund from the tax office is not a patient refund at all. It reverses a liability rather than a sale, and is covered on reconciling a BAS payment or refund.
What Ledger Map does with it
Ledger Map holds one standing map for the practice, approved before anything syncs. A negative payment coming out of the practice system resolves through that map into the document set the money calls for: a release where the money was never applied, and a credit note plus a payment against it where it was.
It posts one balanced document set for the refund and leaves one exact match in the bank feed for a person to accept. A refund that spans held and applied money becomes a question with both candidate postings laid out, because the template says that case has no single answer and a silent posting would be a guess wearing a receipt. How it works shows the map and the approval step it goes through.
Questions
How do I record a refund to a patient in Xero?
Record it as one of two document sets, depending on the money. If the amount was never applied to an invoice, pay it out against the held credits liability and nothing else moves. If it had been applied, raise a credit note on the same account and tax rate as the original line, allocate it to the invoice, then refund the credit balance from the account the money left.
Why can I not just enter a negative payment in Xero?
Xero has no negative payment. A payment reduces what is owed on a document and cannot carry a minus, so the practice system's negative payment has to be translated into a credit note plus a payment, or into a release of money still held. The translation is the whole task.
Does a refund in my practice system reach Xero?
Often it does not. PracSuite states that refunds are not included in the Xero sync and have to be adjusted in Xero by hand. Cliniko states that credit allocations do not appear in Xero and that an invoice paid by account credit stays open on the Xero side. Treat the reversal as manual work until your own system's help centre says otherwise.
What tax rate goes on the credit note?
The same one the original invoice line carried. A credit note reverses a specific sale, so copying the account and the tax rate from that line keeps the reversal landing where the sale did. Choosing a rate rather than copying one is how a refund quietly changes the tax on a sale that has already been reported.
Should the refund come out of the bank account or a clearing account?
Out of whichever account is actually holding the money. A refund paid by transfer leaves the operating bank account and matches an outgoing bank line. A card refund put back through the terminal moves the same clearing account the takings went into, in the opposite direction, and can show up as a smaller settlement rather than a withdrawal.
What happens if I archive the invoice in the practice system instead?
Archiving in Cliniko archives the payments attached to the invoice as well, so the practice system looks settled. That is a different event from a refund, and it does not unwind anything on the Xero side. The Xero invoice and its payment are still there until somebody deals with them.
Read next
- Xero how toHow to reconcile a credit note in Xero
- Xero how toReconcile an overpayment in Xero
- Xero how toHow to reconcile a clearing account in Xero
- Xero how toReconcile a clinic bank account in Xero
- Practice systemsCliniko Xero integration: what syncs, what does not
- GST answersGST on booking deposits
- HubXero how to
Sources
Open questions
- The ranked results for this query were not retrieved on the day this page was written, so the description of the current answer landscape in the brief rests on reading candidate pages rather than on a fresh search.
- Xero Central settles where a spend money, a credit note and a cash refund are reached from, and the steps name those paths. Its wording for refunding a credit note is still cited unverified, and that the payment field carries no negative amount is read off the practice system help centres describing the workaround rather than off Xero's own documentation.
- How a card acquirer handles a refund taken back through the terminal, and whether it reduces a later settlement or arrives as its own withdrawal, is not settled by any source read for this page. The page describes both and prints no timing.
- Cliniko's failed sync article shows a relative timestamp rather than a dated one, so its message strings carry the date they were read rather than the date they last changed.
- Whether a refund reversing revenue reported in a BAS period already lodged is adjusted in that period or in the current one is a question for the practice's BAS agent. The canonical templates do not settle it and this page does not either.
- The canonical templates name the liability a released credit comes out of, but not the bank or clearing account the money physically leaves from, because that depends on how the practice took the money in. No account code is printed for it here.
- Delete or refund a patient's account credit
Cliniko. Retrieved 3 Sep 2026. Source updated 3 Jan 2025.
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- Integrate Cliniko with your Xero account
Cliniko. Retrieved 3 Sep 2026. Source updated 28 Jul 2026.
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- Reconcile in Xero when using the Cliniko integration
Cliniko. Retrieved 3 Sep 2026. Source updated 28 Jul 2026.
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Review
Last reviewed 3 Sep 2026 by Shane
General information for Australian allied health practices, not tax advice. Confirm a treatment with your BAS agent or accountant before you post it.
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