Last reviewed . Next review January 2027.
Short answer

Capture every supplier invoice as a bill when it arrives, not when you pay it. Go to Purchases, Bills, New bill, or upload the PDF and let Xero read it. Attach the supplier's invoice, check the total to the cent, and approve.

Capturing bills on arrival means Xero always shows what you owe and when it is due.

Enter a bill

  1. Go to Purchases, then Bills, then New bill. Or upload the supplier's PDF and let Xero read it (see receipts and documents). VERIFY: bills full-page view rollout
  2. Choose the supplier. Enter the supplier's invoice date, due date and their invoice number in Reference.
  3. Add each line: description, quantity, unit price, account and tax rate. Use the supplier's defaults unless this line is different.
  4. Check that the total in Xero matches the total on the supplier's invoice, to the cent. If the VAT is out by a cent or two, check whether the amounts are set to tax inclusive or tax exclusive.
  5. Attach the supplier's invoice.
  6. Click Approve.

The South African detail: no tax invoice, no VAT claim

If your business is VAT-registered, you can only claim back the VAT on a bill if you hold a valid tax invoice for it. Before you approve a bill with VAT on it, check the document:

  • It says "Tax Invoice".
  • It shows the supplier's VAT number. A South African VAT number has 10 digits and starts with a 4.
  • For amounts over R5,000, it also shows your business name, address and VAT number. If these are missing, ask the supplier for a corrected tax invoice.
  • If the supplier is not VAT-registered, there is no VAT to claim. Use the no-VAT rate, even if the supplier's total "looks like" it has VAT in it.
Golden rule

Attach the tax invoice to the bill in Xero. SARS can ask for it during a VAT verification, and businesses must keep records for at least five years. A tax invoice you can't produce is a VAT claim you can lose.

Pay a bill

  • Pay the supplier from your banking app as usual, using the bill reference.
  • When the payment comes through on the bank feed, match it to the bill on the reconciliation screen. Xero marks the bill as paid.
  • Use Bills to pay on the dashboard, or the Aged Payables report, to plan what to pay this week.

Confirm any change to a supplier's banking details by phone before you pay. Fake "new bank details" emails are a common fraud.

Money spent without a supplier invoice

Bank charges, card purchases and small cash items often have no bill. Don't create a bill for these. Code them straight from the bank line when you reconcile, and attach the slip if there is one.

Supplier credit notes

If a supplier credits you, enter it under Purchases, then Bills, then New credit note, and allocate it to the bill it relates to.