This guide takes a deposit from start to finish with Xero: invoicing it, getting paid, and taking it off the quote’s final invoice so your customer is only charged what’s left.
Check with your accountant first. Whichever way you handle deposits, the method in this guide or the prepayment method below, tax and accounting rules differ by country. Puree doesn’t give tax or accounting advice or take responsibility for how deposits are recorded.
Two ways to handle deposits with Xero
Our recommended way is the one in this guide. Each deposit gets its own invoice in Xero. Once it’s paid, Puree deducts it from the quote’s final invoice for you, as a “Less deposit paid” line.
The prepayment way still works. If you already record deposits in Xero as a prepayment and apply the prepayment to the final invoice, you don’t need to change. Those steps are in Reconciling a Stripe Deposit in Xero.
Use one method for a deposit, not both. A deposit recorded as a prepayment and deducted by Puree would come off the final invoice twice.
1. Set up the deposits account (an admin, once)
Go to Settings → Integrations → Xero Settings and find Deposit invoices.
- Choose the Deposits account: the liability account you hold deposits in, such as 835 Revenue Received in Advance.
- Choose GST on deposits (it uses your own tax name, such as VAT on deposits): Includes GST with its rate, or No tax.
- Read the notice, tick I understand, and save.
- To invoice deposits in Xero, also turn on Use deposit invoices and save.
Puree codes every deduction to this account. The Deduct buttons work once the account, the tax and the tick are set, even with Use deposit invoices off. Until then they’re greyed out with “Choose a deposits account in Xero Settings”.
2. Invoice the deposit in Xero
On the quote page, open the deposit’s ⋯ menu in the Deposits table and choose Create Xero invoice. Check the Xero contact and the dates, then click Create invoice. Puree creates the invoice in Xero, approved, such as INV/19-D1 for Deposit 1 of quote 19. Click Open in Xero to send it, and send it from Xero.
The invoice’s number shows after the deposit’s name, such as INV/19-D1 ↗ · Awaiting payment, linked to it in Xero. If there’s a note about it, an amber warning icon sits beside it: hover to read it. When the panel is narrow, the number and any note show on a line under the deposit instead, such as Xero INV/19-D1 · Awaiting payment. While the invoice is live, the deposit can’t be changed: to change it, choose Void Xero invoice in the same menu first. Processing Deposits in Xero has the details.
3. Get paid
Paid in Xero. When the customer pays the deposit invoice in Xero, Puree marks the deposit Paid, and Payments received shows Paid in Xero · 6 Nov.
Paid another way, and recorded in Puree. Choose + Record payment receipt (or Record payment for this in the deposit’s ⋯ menu), and enter the amount and date. On a quote linked to Xero, the drawer also offers Also deduct it from INV/19 in Xero. Tick it to deduct the payment straight away (see step 4). It starts unticked, and ticking it never stops the payment being recorded.
If the deposit has its own Xero invoice, don’t record the payment in Puree. Apply it to the deposit invoice in Xero instead. The drawer says so (“Apply it to INV/19-D1 in Xero first.”), and offers no tick.
4. Deduct it from the final invoice
The quote’s own Xero invoice still bills the whole quote, so each paid deposit needs to come off it. On the quote page, the Deposits table has a column headed with the final invoice’s number, such as On INV/19. Click Deduct on the deposit’s row, and confirm.
Puree adds a line to INV/19 in Xero, such as Less deposit 1 paid (INV/19-D1) for $742.00, or Less deposit 1 paid (6 Nov) for a payment recorded in Puree. The column then reads Deducted 6 Nov.
- The line’s account and tax: the same as the deposit invoice’s. For a payment recorded in Puree, they’re the deposits account and tax in Xero Settings.
- The final invoice: it drops by the deposit, so the customer is only charged what’s left.
- What’s sent with it: Puree sends the quote’s invoice as it stands, even with auto-sync off, so any quote changes not yet sent go too.
You can also deduct a recorded payment from Settings → Deposits. When the Deposits panel is too narrow for the column, on a small screen or a narrow window, the column isn’t shown: the Xero number and any notes sit on a line under the deposit, and Deduct sits beside the payment in Payments received. A payment spread over several deposits always has its Deduct there.
Undo
Open the deposit’s ⋯ menu and choose Undo deduction. Puree removes the line from INV/19, and the deposit is billed on it again. Use it if a deposit was refunded, or deducted by mistake.
A deducted payment can’t be deleted in Puree until the deduction is undone.
What the column shows
| The column reads | What it means |
|---|---|
| Deducted 6 Nov | The deposit is off the final invoice. Hover for the line’s words. |
| Deducted from INV/19 · 6 Nov (under the row) | The same, when the panel is too narrow for the column. |
| Deduct | It’s paid and can be deducted now. |
| Deducted · not confirmed | Xero didn’t answer clearly. The line stays, and the next sync confirms or removes it. Check INV/19 in Xero. |
| Check in Xero (amber) | Someone changed or removed the line in Xero. Hover to see what. Puree puts its own line back at the next send. |
| A grey reason | It can’t be deducted yet. Hover for the full reason. See below. |
| — | Nothing to deduct yet, such as a deposit that isn’t paid. |
The grey reasons, and what to do:
- Apply it to INV/19-D1 in Xero first. A payment was recorded in Puree for a deposit that has its own Xero invoice. Apply the payment to that invoice in Xero, then deduct the deposit invoice.
- Choose a deposits account in Xero Settings. See step 1.
- INV/19 has a payment: credit it in Xero. Xero won’t let Puree change an invoice once something is paid or credited on it. Credit the deposit by hand (see below).
- INV/19 is voided in Xero. There’s no final invoice to deduct from.
- INV/19-D1 was partly credited: credit it in Xero. Part of the deposit invoice was settled with a credit note, not money. Puree leaves this one to you, so credit it by hand.
Xero can also refuse when you click, for example for an invoice in a locked period, or if the deductions would take it below zero. Puree tells you why, and nothing changes.
Tip: deduct each deposit before you apply any payment to the final invoice in Xero. Once the final invoice has a payment, Puree can’t add the line.
When Puree can’t deduct: credit it by hand
- In Xero, create a credit note for the same contact.
- Set Amounts are to Tax Inclusive for a deposit with Includes GST (or your own tax name), or No Tax. Add one line: Deposit 1 paid (INV/19-D1), the amount paid ($742.00), your deposits account, and the deposit invoice’s tax rate.
- Check the credit note’s total equals the amount paid, then approve it.
- Choose Allocate credit, and allocate it to the final invoice, INV/19.
What Puree never does
- It never deducts anything by itself. A deposit comes off only when someone clicks Deduct, or ticks the box when recording a payment.
- It never creates credit notes or allocates prepayments in Xero.
- It never records a payment in Xero for you, and never emails invoices: send them from Xero.
Chefs don’t see any of this.
A worked example
Quote #19 for Horizon Retail Group is $3,705.88, and its final invoice in Xero is INV/19. It has three deposits: Deposit 1 is 20%, $742.00; Deposit 2 is $1,112.00; Deposit 3 is $1,851.88.
- You create Deposit 1’s invoice, INV/19-D1, and send it from Xero.
- The customer pays it in Xero on 6 Nov. In Puree, Deposit 1 reads Paid, and the On INV/19 column shows Deduct.
- You click Deduct. INV/19 gains Less deposit 1 paid (INV/19-D1): −$645.22 plus −$96.78 GST, so −$742.00, coded to 835 Revenue Received in Advance. INV/19 now comes to $2,963.88.
- The column reads Deducted 6 Nov, and the customer is charged $2,963.88 on the final invoice: Deposits 2 and 3 ($1,112.00 and $1,851.88).