This issue commonly arises when a supplier issues a statement/invoice that contains a credit relating to a previously paid cost recovery - e.g. HMLR refunds.
Scenario:
- The cost recovery is paid
- The paid cost recovery transaction is reconciled in the bank reconciliation in Xero
- The paid cost recovery is invoiced
- The invoice is paid
Issue:
The paid and invoiced original cost recovery, cannot be reversed.
The refunded value needs to be returned to the client
Solution:
- Post a cost recovery on the matter payable to the client
- Generate an invoice on the matter including the refund cost recovery to the client
- Post the Refund from the supplier e.g. HMLR against the invoice