This video provides a complete walkthrough of how to connect, configure, and use the Xero integration with Payaca.
Connecting to Xero
To begin, you need to authorise the connection between Payaca and Xero.
In your Payaca account, click on your logo/profile icon in the top right corner.
Go to Connections.
Find the Xero option in the list and click on "Connect to Xero".
You will be redirected to Xero's login page. Log in with your Xero email and password.
If you have access to multiple organisations in Xero, select the correct one from the dropdown menu.
Click "Allow access" to grant Payaca permission to connect.
You will then be taken back to Payaca, where a "Configure Xero Setup" pop-up will appear.
Configuring Your Xero Settings
This initial setup is crucial for ensuring your financial data is categorised correctly in Xero.
Sales Settings (Default Revenue Account)
This setting determines the default account in Xero where your revenue from invoice line items will be recorded.
You need to select a fallback revenue account from the dropdown list, which is pulled from your Xero Chart of Accounts (e.g., "200 - Sales").
Note: You can set a specific revenue account for each individual line item within Payaca's "Items You Sell" settings. This configuration is simply the default if a specific one isn't set.
Tax Rate Mapping
This step is for matching your tax rates in Payaca to your existing tax rates in Xero.
The right-hand side of the mapping table shows the tax rates available in your Xero account.
For each Payaca tax rate on the left, select the corresponding Xero tax rate from the dropdown on the right (e.g., map Payaca's "20% VAT" to Xero's "20% (VAT on Income)").
If you don't have a corresponding tax rate in Xero for a specific Payaca rate, you can leave it unmapped, but be aware that transactions using that rate may not sync correctly. You may need to create the required tax rates in Xero first.
Purchase Settings
Similar to tax mapping for sales, you need to map your purchase tax rates. This affects purchase orders created in Payaca.
Match your Payaca purchase tax rates to the corresponding expense tax rates in your Xero account (e.g., map "20% VAT on Expenses" to the equivalent rate in Xero).
Once you have completed the configuration, click Save to confirm.
Importing Data from Xero (Optional)
After configuring your settings, you will see options to import data from Xero.
Import line items from Xero: This will import your products and services from Xero into Payaca's "Items You Sell" list.
Importing Xero customers: This will import your Xero contacts into your Payaca customers list. This is useful for ensuring that invoices created in Payaca link to the correct existing customer records in Xero.
On the Customers page a Xero icon shows if there is a defined link between the record in Payaca and the Contact in Xero. Any invoices or purchase orders sent that relate to this Contact in Xero will link to the existing record.
Important: Use these import functions with care. It is best to ensure your data in Xero is clean and well-organised before performing a bulk import.
How the Integration Works: What Gets Synced?
Sales Invoices
Automatic Sync: When an invoice is created and sent in Payaca, it is automatically pushed to Xero.
Activity Feed: You can see a record of this sync in the Activity tab of the corresponding project (e.g., "Xero invoice 1009 was pushed to Xero").
Xero Link: In the main Invoices list in Payaca, a small Xero icon will appear next to any synced invoice. Clicking this icon will take you directly to that invoice in Xero.
Customer Matching: When an invoice is synced, Payaca attempts to match it to an existing contact in Xero using either a previously stored link or by matching the primary contact's email address. If no match is found, a new contact record will be created in Xero along with the invoice.
Voiding Invoices: If you void an invoice in Payaca, it will also be voided in Xero automatically.
Manual Push: If an invoice ever fails to sync, you can manually push it by going to the invoice line, clicking the three dots (...) at the end, and selecting "Push to accounting software". This will not create a duplicate if it has already synced.
Purchase Orders
Automatic Sync: When you create and send (or mark as sent) a purchase order in Payaca, it will be created in a "sent" state in Xero.
Status Updates: When you receive a supplier invoice and use the "Confirm Purchases" function in Payaca, the status of the purchase order will be updated in Xero.
Voiding Purchase Orders: If you void a purchase order in Payaca, it will also be voided in Xero.
Important Rules and Best Practices
Source of Truth: Make all changes to invoices and purchase orders in Payaca, not directly in Xero. Changes made in Xero will not sync back to Payaca. Payaca is your operational system, and Xero is your accounting record.
Invoice Reminders: It is best practice to send your invoice reminders from Payaca. This is because payments made via Payaca (e.g., through Stripe) are recorded in real-time, giving you a more accurate view of what is outstanding.
Payment Reconciliation: Payaca does not pull payment status back from Xero after a bank reconciliation. Payments (especially BACS transfers) should be marked as paid in Payaca when you receive them. The reconciliation process in Xero is a separate accounting function.
Stripe Payments: If you use Stripe with Payaca, it is recommended to add Stripe as a bank account within Xero. This allows for direct reconciliation of Stripe payouts. You will likely also want to set up a banking rule in Xero to account for Stripe's transaction fees.
What Does NOT Sync?
Quotes / Proposals: Quote and proposal details created in Payaca are not sent to Xero. The integration focuses only on the financial transactions that follow an accepted proposal, namely invoices and purchase orders.
FAQs
Q: What happens if I collect a deposit with a quote?
A: If you request a deposit an invoice will be created for the deposit and sent to Xero when the quote is accepted. Then a new invoice will be sent for each subsequent invoice created.
Q: Does Payaca send information about payments taken to Xero?
A: No, Xero will reconcile payments from the connected bank accounts with the invoice records. Invoices are marked paid in Payaca before they are reconciled in Xero so your automated invoice reminders should be set up in Payaca and turned off in Xero.
Q: I still have more questions!
A: Please click the live chat icon in the bottom right and one of the team will be happy to help.