Xero Integration setup

The Xero integration allows small to medium-sized businesses to link all their inventory and order management activities on Stock&Buy with their accounting records on Xero. This tremendously helps streamline business operations by aligning your inventory records with your accounting journal in a simple and effective way. This automation is enabled by the Stock&Buy ability to link invoices, payments, stock, and customer data automatically with your Xero account.

This articles covers:

1. Installation
2. Ledger account settings
3. Tax mappings
4. Product sync
5. How does the integration work
6. Data synchronization timing
7. Sync status report

Installation

To link your Xero account with Stock&Buy:

1. Login to your Stock&Buy account (or create one if you are not already a member)
2. From the left navigation menu, click on Integrations
3. Look for the Xero integration tile and click on Link to Xero
4. Follow the on-screen instructions

Ledger account settings

Stock&Buy automatically syncs your sale orders, purchase orders, inventory adjustments, stock on hand, and cost of goods sold to Xero. In order to have a smooth experience, we recommend you ensure the following ledger accounts exist in Xero first.

Account	Account type	Notes
Sales Account	Sales	Ledger account where sale invoices are sent to. Sales data can be split to different sales accounts using sales sync rules.
Payments account	Revenue	Ledger account where payment information are synced to. Payment data can be dispatched to different ledger accounts using the payment sync rules.
Purchases Account	Current Asset	Ledger account where purchase orders are synced to
Stock on hand	Current Asset	Ledger account used to track your inventory value. Important: Do not use the default Xero Inventory ledger account. It is reserved to Xero only and cannot be used within Stock&Buy
Cost of goods sold	Expenses	Ledger account used to track your cost of goods sold Important: Do not use the default Xero Inventory ledger account. It is reserved to Xero only and cannot be used within Stock&Buy
Adjustments	Expenses	Ledger account used to record irrecoverable stock such as loss, shrinkage and write offs. Inventory adjustment data can be synced to different ledger accounts using the adjustment sync rules.

The account types used above might be different depending on your business and accounting practices. We highly recommend you review these settings with your accountant.   

Tax mappings

Correct tax reporting is vital for businesses. The right rate has to be applied to the right line item to make sure the business is in compliance with their local tax authorities. The tax mappings settings allow you to define tax classes in Stock&Buy that correspond to your tax classes in Xero.

You only need to define mappings for tax classes that you will actively be using in Stock&Buy. Xero tax classes that you won’t be using in Stock&Buy can be left unmapped.

Xero US, Canada, and Global

If your Xero version is US, Canada, or Global then Stock&Buy will automatically push your tax definitions within Stock&Buy to Xero. This applies to both sales and purchases tax rates (also applies to orders coming from online shops such as Shopify)

Products synchronization (optional)

This setting allows you to setup Stock&Buy so it syncs product information to Xero. You can choose to sync your products by SKU or barcode.

Products that do not already exist in Xero are synced as “Untracked items”.

How does the integration work

Action in Stock&Buy	Resulting transaction in Xero
Approve a purchase order	A bill is created against your Purchases account account
Receive a purchase order	Creates a journal entry that moves the net amount (without tax) of the purchase order from the Purchases account to your Stock On Hand account.
Void a purchase order	Sets the corresponding bill back to Draft (see note below)
Authorize a supplier return	A credit note is created against your purchases account in Xero. At the end of the day, a journal entry is created to move the credit note value from the Stock On Hand account to the purchases account.
Invoice a sale order	An invoice is created against your Sales account in Xero
Record a payment for a sale order	Marks the corresponding invoice as Paid in Xero and pushes a note to your payments account
Void a sale order	Sets the corresponding bill back to Draft (see note below)
Create a sale refund	A credit note is created against your sales account in Xero
Ship (fulfill) a sale order	A journal entry is created to move the order total cost of goods sold from the Stock On Hand account to the Cost of Goods Sold account. Any refunds attached to the closed order will result in a journal entry moving the total cost of the refund from the cost of goods sold to the Stock On Hand account (if the items are restocked) or the Adjustments account if the items is written off
Create an adjustment	A journal entry is created moving the total adjustment value from the Stock On Hand ledger account to the adjustments ledger account

Stock&Buy can set an invoice or purchase order to Draft state only and only if the document (invoice / bill) has no payments attached to it. Otherwise, the document has to be manually modified within Xero.

Synchronization timing

Stock&Buy performs synchronizes sale and purchase orders every 5 minutes. This also happens whenever a sale or a purchase order gets changed or updated. You can also force the synchronization of pre-selected sale and purchase orders via the Xero Sync Status report.

Stock On Hand (SOH) and Cost Of Goods Sold (COGS) transactions are synchronized as journal entries once a day at 8:00 PM GMT.

Reconciling Stock&Buy and Xero

To ensure your inventory valuation is always the same in Stock&Buy and Xero, we recommend you double check your Stock on Hand value within Stock&Buy and make sure it matches your Stock On Hand balance in Xero. Once this initial check is done, your total stock on hand across all inventory locations in Stock&Buy should always be equal to that reported in Xero. If the values in the Stock on Hand report in Stock&Buy differs from the Stock On Hand account balance in Xero, then simply follow each step outlined below in order:

1. Ensure transactions from Stock&Buy are processed and approved in Xero. You can use the Xero Sync Status report to help you spot items which have not been processed.
2. If it is not matching, then you should run a ‘Account Transactions’ report inside Xero for your Stock on Hand account. All transactions recorded against to this account should be from Stock&Buy so anything being posted from elsewhere will cause a discrepancy.
3. Check your activity feed for any errors coming from the Xero Integration.
4. If all the above did not help to spot the underlying issues then you may need to make an adjustment in Xero and monitor the balances going forward.