Xero invoice settings – Performance Accountancy – MTD

In this video, we are looking at how to set up your sales invoice settings in Xero. This controls what your invoices look like, where the numbering starts, your default payment terms and the standard information that appears on the invoice.

Before you rely on Xero for sales invoices, remember the invoice limits. Xero Simple allows up to 10 sales invoices per month, Xero Ignite allows up to 20 per month, and Xero Grow allows unlimited sales invoices. If you are a teacher who raises a lot of invoices at the beginning of each half term, the 10-invoice limit in Xero Simple may be used up very quickly. In that case, you may need to move to Ignite or Grow, or raise invoices somewhere else and cash code the income when it arrives in the bank.

To set up invoice settings, go to the name of your Xero organisation, then Settings, then Invoice Settings. In a new file, this area may be completely blank. One of the first things you can do is upload your logo so that your invoices look more professional.

Xero allows you to have different branding themes. For example, if you issue invoices for teaching and performing under different names or brands, you could set up different invoice themes. For most people, one standard invoice theme will be enough.

In the default settings, you can set your standard payment terms. For example, you might set sales invoices to be due 14 days after the invoice date and purchase bills to be due 30 days after the bill date. These defaults save time, although you can still change the terms for a particular customer or invoice if needed.

You can also set the invoice numbering. Xero typically starts invoices with ‘INV’ followed by a number. It is important that your invoice numbers run sequentially. If HMRC ever looks at your records and sees missing invoice numbers, they may ask what happened to them. If you have already been issuing invoices somewhere else, start the Xero numbering from the next number in your existing sequence rather than beginning again at number one.

Credit notes and purchase orders have their own numbering options. Many sole traders and small performers will not need purchase orders, but the settings are there if you want them. Quotes can also have expiry dates. For example, if you quote for a wedding or private event, you might say that the quote is valid for two months, after which the fee would need to be reviewed.

Xero can also connect to payment services such as PayPal, GoCardless or other providers. That can be useful, but it is not something you need to set up immediately if you are still getting used to the system.

Invoice reminders can be helpful. Xero can email customers automatically when an invoice is overdue. The reminder wording can include fields such as the customer name, invoice number and payment link. You can edit the wording so it sounds like you, rather than a slightly grumpy robot from accounts.

The main invoice theme settings can be found by selecting the standard theme and editing the options. Here you can control the paper size, margins, font, logo position and the wording that appears on draft and approved invoices. If you are a limited company, you may also need to show your registered office details. For a self-employed person, that will usually not apply in the same way.

You can also enter your contact details and payment terms. For example, you might state that standard terms are 14 days and ask customers to pay by bank transfer. You should include the correct account name, sort code and account number. If you are self-employed, the account name may be your own name unless your bank account is specifically in your trading name.

Once the standard details have been entered, save the invoice theme. From then on, each invoice you raise should use those standard settings, which helps your invoices look consistent and reduces the amount of typing you need to do each time.

That is the basic setup for invoice settings in Xero. Once these are in place, the next step is to raise an actual sales invoice.