Magnetic has the ability to integrate with Xero.
Before we get started with telling you more about how it all works, watch this video below:
How does the integration work?
- Tax and Supplier Invoices, as well as Tax and Supplier Credit Notes, will be exported to Xero from Magnetic.
- If an item type does not exist in Xero, it will be automatically created the first time it is used in Magnetic. This will only update when you create an Invoice or Credit Note for that specific item type. It is 2-way integration.
- Payment status updates in Xero will be synchronised with Magnetic which will make the payment status easy to view.
- We do exports to Xero in real-time
- We import the payment status every 15 minutes Having up-to-date payment statuses in Magnetic allows your account managers to see who owes you money without having to access the external accounting platform
- Real-time exporting means that accountants don't have to spend any time transferring credit notes, tax invoices etc. and have a live review in the accounting system of the business in Magnetic
How to set-up the Xero integration from Magnetic
***Note***Only managers or admins can access company settings page
Step 1: Hover your mouse cursor over your name. Click on Company Settings.
Step 2: Click on the Accounts accordion
Step 3: Towards the bottom, there will be an integration settings section
Step 4: In the integration settings section, first set the accounting platform option to Xero
Step 5: Set Tax & Supplier Invoices and Credit Notes to ‘Export’
- Currently, we only support Tax & Supplier Invoices and Credit Notes for export
Step 6: Select the base currency you wish to use
- To use a specific currency, you need to ensure that it's created in Xero. So in other words: If you select ‘ZAR’ as the base currency, you need to ensure that ZAR exists in Xero as well. Once logged into your Xero account, you can go to Settings, and go to Currencies and Add Currency if it does not exist.
Step 7: Click Save
Step 8: Click ‘Authorise Xero Account’
(This will automatically open a new tab for you to sign into your Xero account if you aren’t already signed into your Xero account)
Step 9: In the new tab that was automatically opened, sign into your Xero account if not already signed in.
Step 10: Once signed in, select organization, Click Authorise.
(Company settings page in Magnetic will automatically refresh now)
Step 11: Go back to the Accounts accordion
(You will then see Xero Tax Type mappings)
- This will import all Tax Rates from the Xero organisation that has been authorised
- E.g. Specify the Magnetic Tax Mapping to the specified rates used in Xero
Step 12: Specify all fields/mappings
Step 12: The Default Sales Code is used when creating items in Xero.
- If nothing is specified, the "200 Sales Account" is used.
Step 13: Click ‘Save’ to save your settings
(See bottom of your screen and notice that your Xero account says ‘Active’, if not, please start process from Step 1 above)
Congratulations! You have successfully linked your Xero account to Magnetic
Magnetic does not get involved with transferring your data from another accounting platform into Xero. We would always recommend an accountant be involved in the process to ensure the data is accurate, but we have some conversion partners listed here who might be able to help:
CREATING ITEM TYPES
There are 2 item types you will find:
- Item Type that exists in Xero
- Item Type that does not exist in Xero
- ‘Sales’ codes (revenue related) and ‘Cost of Sales’ codes (not revenue related) seen in Magnetic have been automatically imported from the Xero account that has been authorised. Item Type codes are also imported from Xero.
- If no Sales Code is selected it will be set to the default of Sales 200
- Cost of Sales has no default, therefore this will only be shown if you specify an item in this field
1. Add Item Types to Magnetic that already exist in Xero
Step 1: Go to the Accounts drop-down menu and Click ‘Item Types’
Step 2: Click ‘New Item Type’ on the Item Types page in the top left corner
Step 3: Go to Item Code and select Item Code in Xero from the dropdown. This will create an item type in Magnetic that already exists in Xero.
- When changing an item in the item code drop-down, the sales code and cost of sales code will be populated from the items selected.
- When the 'Tester' item is selected from the drop-down, below, the sales code is populated to the sales details on that specific item - Sales (200)
***Note*** Only set 'cost of sales' code if this is an item that is purchased from a supplier and needs to be assigned to a cost of sales account
- Item Codes seen in Magnetic have been automatically imported from the Xero account that has been authorised.
- Sales Codes seen in Magnetic have been automatically imported to Magnetic for Sales portion of the item in Xero.
- Cost of Sales Codes seen in Magnetic have been automatically imported to Magnetic for Purchases portion of the item in Xero.
2. Create new Item Type in Magnetic that does not yet exist in Xero
Step 1: Go to the Accounts drop-down menu and Click ‘Item Types’
Step 2: Click ‘New Item Type’ on the Item Types page
Step 3: Leave Item Code blank
***Note***This will be seen in Xero only when you create or edit the next invoice or credit note after the Item Type has been created
Invoice and credit note exporting
Step 1: Go to Tax Invoices page by going to Accounts drop down and Clicking ‘Tax Invoices’
Step 2: Click ‘New Tax Invoice’ in the top left of the screen
- Ideally create a contact beforehand (you can add more information to a contact or company) although you can create a new contact in the new tax invoice if you have the permissions to, but you will be restricted to the name for a company and a name and email address for a contact.
Step 3: Search contact in contact field and select contact.
What exactly is exported when a contact is created in Xero?
- Contact Name: Company Billing Name otherwise Company Name.
- Contact Person Name: Contact First Name + Contact Last Name.
- Contact Person Email: Contact Email (Default: “firstname.lastname@example.org”).
- VAT #: Company Tax Number.
- Postal Address: Company Postal Address.
- Physical Address: Company Physical Address.
- Is Customer: Approved Customer if Supplier Invoice/Supplier Credit Note.
- Is Supplier: Approved Supplier if Tax Invoice/Credit Note.
Step 4: Search company in company field and select company.
- If the client is not approved they will not appear when you are searching for contact or company in their respective fields
- Contact and Company fields will go grey as seen below when an existing company, in Magnetic, is selected.
- If these fields are white then an existing contact or company has not been selected
***Note*** If 'only approved companies’ in accounts is set to true on the company that you want to issue the invoice or credit note to, then you need to have permission to create new companies otherwise you can only select an approved company
***Note*** To decide whether a company can be approved or not you need to be an account admin - If you have permission you can go to the company and set it to ‘Approved’, alternatively you can also create the company when searching as well.
Step 5: Select a Job - this has no effect on the export as no job-related data is used.
Step 6: Fill out the fields
- Add a Title
- Title for Tax Invoice only appears in Magnetic and is NOT exported to Xero
- Select Issue Date (which will be the date shown in Xero)
- Select Payment Date (seen as the due date in Xero)
- Add a description - this will be exported to Xero
(If ‘Payment Date’ is not specified it will determine due date from terms of payment in Magnetic e.g. if terms of payment is 21 days in Magnetic it will add 21 days to issue date)
Step 7: Add items in item lines at the bottom of the screen, you can add multiple items by clicking on the add icon (The Item will be used as the name in Xero otherwise the description for each line will be used as the Item Name in Xero) and Make selection under tax type drop-down on the right of each line item
- Item type you created will be exported based on the item type you have selected above
- Details per line item will also be exported through to Xero
- Xero does not have markup as seen in Magnetic, therefore value sent through to Xero is inclusive of markups
- Discounts in Magnetic will be for the entire invoice instead of per line, in Xero each line will specify the discount.
Step 8: Click ‘Save’ Tax Invoice
- It will now be exported if there is a failure you will receive an in-app notification.
- Congratulations! You have created a Tax Invoice and exported it to Xero
- Successfully exported Tax Invoices will have a green tick on the left-hand side of each Tax Invoice on the Tax Invoices page, you can click on this green tick and it will take you to the Tax Invoice in Xero
- You can also access Xero from Magnetic and access Magnetic from Xero as seen below
***Note*** All payment status changes done in Xero will be updated in Magnetic, updates happen every 15 minutes.
Below shows how the Magnetic statuses map to those in Xero:
The total of payments paid, in Xero, is less than the amount due.
||Paid (The total of payments paid, in Xero, is equal to the amount due)
Below shows how the Xero statuses map to those in Magnetic:
||Issued, Part-Paid, Paid, Credited or Part-Credited
Common problems faced and how to fix them:
1) Xero ‘does not exist or cannot be applied to Items’ error:
This error happens when a user exports an invoice/credit note to Xero - by saving or editing, but one or more of the item types that are specified in the line items have incorrect sales, cost of sales and item codes - those that don't exist in Xero.
Don't worry, fixing this is easy, but first, it's important to understand why it is happening and what causes this error.
Why does it happen?
When an invoice is exported from Magnetic to Xero, it needs to match up the codes (in order to know which item in Xero belongs to which item type in Magnetic), before it can proceed. If it happens that a selected item type is found, which has a code that doesn’t exist in Xero, it will give you the following error below. With that said, an account with code ‘RETAINER-I’ does not exist in Xero.
Below is what the problematic item type’s sales code looks like. As you can see this is where the error is.
Fixing the error:
1) In Magnetic, under Item Types, search and find the problematic Item Type. You will need to go through each line item's item types if you are unsure where the problem is.
3) Select one of the existing accounts from the drop-down and click Save.
Once you have made all the relevant fixes to all problematic item types, you can save the invoice again and the error should be no more.
** PS: Just remember that this issue can happen with the cost of sales and item code fields as well, so just repeat the process for each field or all 3 code fields, where necessary.
What could cause this error:
Old item types that had previous (outdated) sales, cost of sales, or item codes set before.
Deleting item/s in Xero and not deleting them in Magnetic.
Manually setting the sales, cost of sales, or item codes if no Xero authorisation has been done or the Xero authorisation has been removed, as the sales, cost of sales and item code fields change from a drop-down field to a plain text field where the user can type in
2) Invoice not of valid status for modification. (Cannot go from say Issued to Draft)
This error is caused when an invoice being exported has already been exported to Xero and is marked as void, paid or part -aid or has another unmodifiable status. To resolve this issue, locate the invoice in Xero and manually update the invoice on Xero.
3) Invoice # must be unique. (Invoice was voided)
A manual edit is the one way to resolve this issue.
4) Invoice not of valid status for modification. This document cannot be edited as it has a payment or credit note allocated to it. (A payment/s were added in Xero)
This error message will occur when you are attempting to export an invoice that has already been exported to Xero and is marked as paid or part-paid in Xero. Please note that Xero will NOT allow invoices, that have been marked as paid or part-paid, to be updated or changed.
A manual edit, in Xero, is the one way to resolve this issue.
5) The description field is mandatory for each line item.
To resolve this problem, ensure all line items for a credit note have descriptions.
It is important to note that, description fields are automatically populated from the item type selected on the line item - if one exists. They can also, however, be edited manually per line item.
Once all problematic line items contain descriptions, this problem should be resolved.
6) Xero removal of users or Magnetic add-on will cause an issue with the Xero Integration on Magnetic.
Don't worry this is fairly uncommon but possible. Any possible changes to users in Xero should be communicated to us prior to avoid any potential issues.
7) No Xero currency for [CURRENCY] exists. Please first add [CURRENCY] to the currency list in Xero and then try again.
You need to add the matching currency that appears on the invoice or credit note, in Xero as well. So if you have selected USD on the invoice or credit note, then you need to add USD in Xero so Magnetic can easily match the currencies when exporting.
If you are not sure as to how to add currency in Xero, view: Add Foreign Currency in Xero.
** [CURRENCY] refers to the selected currency on the invoice or credit note, such as USD, GBP, and so on.