Overview

Batchly can allocate existing supplier credit notes to authorised bills in Xero as part of a payment run. This reduces the cash required and records which amounts were settled by credit.

You choose the bills and whether to apply credits for each supplier. Batchly calculates the proposed allocations, which you review before applying them in Xero. It does not create new credit notes.

Before you begin

• Sync Batchly before starting so you are working from current bill and credit balances.
• Bills must be authorised and have an outstanding balance.
• Credit notes must already exist in Xero, be authorised and have an available balance.
• Credits must belong to the same supplier as the bills and match their currency.

Batchly-created credit allocations are available on Plus and Scale, with applicable trial and legacy access. Your organisation's credit-allocation setting must also allow Batchly to apply credits.

How credit note allocation works

1. Select the bills you want to include in the run.
2. Review available supplier credits and whether applying credits is enabled for each supplier.
3. If using partial payments, review the amount selected to settle for each bill. This amount includes credits and cash.
4. Follow the payment workflow. For a supported cash-payment run, the banking file uses the net cash amounts calculated from the proposed allocations.
5. At Apply Credits, review the proposed allocations and click Apply Credits in Xero.
6. Wait for the results and review any failures before continuing.

Selecting bills, viewing proposed allocations or downloading a banking file does not itself write the credit allocations to Xero. The writeback happens when you process the Apply Credits step.

Which credits and bills are used first?

• Credits: Oldest credit-note date first.
• Bills: Largest selected settlement amount first. If no partial amount is selected, this is the bill's outstanding balance.
• Equal bill amounts: Earliest due date first. If those dates also match, the existing input order is retained.
• Remaining credit: A credit can continue across other eligible selected bills until used up. Several credits can also contribute to one bill.

An older bill is therefore not necessarily allocated credit first: the selected settlement amount takes priority over the due date.

Example: one supplier, two bills

You select the full outstanding balances of Bill A ($1,000) and Bill B ($600). The supplier has an older $700 credit note and a newer $500 credit note, both eligible and in the same currency.

1. The older $700 credit is allocated to Bill A, the larger bill.
2. The newer credit supplies another $300 to cover the rest of Bill A.
3. The remaining $200 from the newer credit is allocated to Bill B.

How partial-payment amounts affect allocation

A partial-payment amount is the settlement target for this run, including credits. Batchly allocates credits against that target, then calculates any cash needed.

For example, if a bill has $1,000 outstanding and you select a $700 target, applying $300 in credits leaves $400 cash to pay and $300 open after completion.

If credits cover a smaller target entirely, no cash is required, but the rest of the bill remains open. See Why Cash May Remain After Credits for more examples.

What happens in Xero

Each successful allocation reduces the bill's outstanding balance and the credit note's available balance by the amount applied. Unused credit remains available in Xero.

A bill becomes Paid only when its full outstanding balance has been settled. For a run with cash payments, those payments are recorded separately through Mark as Paid after you confirm bank processing.

You can review allocations against the relevant bills and credit notes in Xero. Applying credits does not move money through your bank.

What appears in the banking file

For a supported banking-file workflow, only the cash required for the selected targets is included. Credit allocations and balances left open for later runs are not bank payments.

Bills with no cash to pay do not create zero-dollar payment lines. If the whole run is credit-only, no banking file is required. See Credit-Only Payment Runs.

What suppliers see

If you send remittances, the attached PDF helps explain the bills included, credits applied and cash paid, with remaining balances where applicable. This helps suppliers reconcile a cash payment that is lower than the original bill totals.

If credits are missing or an allocation fails

• Check the credit note's status, remaining balance, supplier and currency in Xero.
• Check whether applying credits is enabled and whether the credits have been allocated to other selected bills.
• If processing has started, review successful and failed allocations before retrying. Do not assume a failed run reversed allocations already completed.
• Use the recovery options shown, or contact support if the outcome is unclear. Do not change an already-submitted bank payment based only on an allocation error.