Reverse Transactions in Xero

Contents

• Overview
• How Transactions Reversals Work
• Transaction Reversal Details
• Troubleshooting
• Known Limitations

Overview

Ordway synchronizes invoices, credit memos, payments, and other financial transactions with Xero. When a synchronized transaction is reversed in Ordway, the corresponding transaction in Xero is updated based on the transaction type and the status of the accounting period.

Instead of deleting the original transaction, Ordway creates an appropriate reversal transaction where supported. This approach preserves accounting history, maintains an audit trail, and ensures that financial records remain traceable in both Ordway and Xero.

Ordway supports reversing both Batch Payments and Overpayments synchronized with Xero. During overpayment reversal, Ordway removes the overpayment and its allocations from Xero and reopens the affected invoices in both Ordway and Xero. 

For supported transaction types, Ordway also stores the Xero-generated reversal transaction ID for reference.

Prerequisites

Before reversing a transaction, ensure that:

• The Xero integration is configured and active.
• The transaction has been successfully synchronized to Xero.
• You have the required permissions in both Ordway and Xero.
• The transaction belongs to an open accounting period in Xero.

How Transaction Reversals Work

The reversal behavior depends on the type of transaction being reversed.

Transaction Reversal Details

Reverse a Positive Invoice

When a positive invoice is reversed in Ordway:

• A Credit Memo is created in Xero.
• The Credit Memo is automatically applied to the original invoice.
• The original invoice is closed after the Credit Memo is applied.
• The Xero Reversal ID is stored in the Xero Reversal ID custom field.

If the invoice belongs to a locked accounting period, Xero rejects the reversal request.

Example error

• The document cannot be edited as it is currently dated before the end of year lock date.

Reverse a Negative Invoice

Negative invoices are synchronized to Xero as Credit Memos.

When a negative invoice is reversed:

• A positive invoice is created in Xero.
• The original Credit Memo is automatically applied to the new invoice.
• Both transactions are closed after the application.
• The Xero Reversal ID is stored in the Xero Reversal ID custom field.

If the Credit Memo belongs to a locked accounting period, the reversal request fails.

Reverse a Credit Memo

Credit Memos are synchronized to Xero as Credit Notes.

When a Credit Memo is reversed:

• A positive invoice is created in Xero.
• The Credit Memo is automatically applied to the new invoice.
• Both transactions are closed.
• The Xero Reversal ID is stored in the Xero Reversal ID custom field.

If the Credit Memo belongs to a locked accounting period, Xero rejects the reversal request.

Reverse a Payment

Payment reversals are supported. The reversal behavior depends on how the payment is synchronized to Xero. 

Batch Payment

A payment is synchronized as a Batch Payment when the Unapplied Amount is 0.

Example

When a payment is reversed:

• The payment is deleted from Xero.
• The payment status in Ordway is updated to Reversed.
• No additional reversal transaction is created.
• A Xero Reversal ID is not generated.

Overpayment

A payment is synchronized as an Overpayment when the Unapplied Amount is greater than 0.

Example

When reversed:

• Ordway removes the overpayment allocation from Xero.
• The overpayment is deleted from Xero.
• The affected invoices are reopened in both Ordway and Xero.
• No Xero Reversal ID is generated.

Note

If the payment belongs to a locked accounting period, Xero may reject the reversal request until the accounting period is reopened.

Reverse a Refund

Refund reversals are not supported.

Refund transactions cannot be reversed through the Xero integration.

Xero Reversal ID

Ordway stores the Xero-generated reversal transaction ID for supported reversal operations.

The Xero Reversal ID custom field is populated for:

• Positive Invoice reversals
• Negative Invoice reversals
• Credit Memo reversals

Payment reversals, overpayment reversals, and refund reversals do not generate a Xero Reversal ID because no reversal transaction is created in Xero. 

Troubleshooting

Known Limitations

The following limitations apply to transaction reversals:

• Refund reversals are not supported.
• Transactions in locked accounting periods cannot be reversed until the accounting period is reopened.
• Payment and overpayment reversals do not create separate reversal transactions in Xero. 
• The Xero Reversal ID is generated only for supported invoice and Credit Memo reversal transactions.

Related Topic

• Xero Integration