Xero Integration - Basics

Once DEAR Inventory and Xero are connected, DEAR Inventory becomes the central point of all inventory management within your business. This means that all inventory-related purchases, sales, and manufacturing will be performed in DEAR Inventory and then synchronised over to Xero.


NOTE: If necessary, you can easily switch between accounting apps, such as changing from Xero to QuickBooks Online, switching from one Xero organisation to another, or disconnecting Xero/QBO to use DEAR as a standalone accounting system. For more information, refer to Switching Accounting Integrations.


NOTE: Xero Inventory functionality is not compatible with DEAR. If you already have stock recorded in Xero using Xero Inventory, you will have to remove it and re-create in DEAR.


We recommend reading the Getting Started Guide in conjunction with this setup article. 


A video tutorial is also available.


Prerequisites:

  • Open a Xero account (trial account is sufficient)


Table of Contents


Setting up Accounts in Xero

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The chart of accounts is the list of all accounts your organisation has available to record your transactions and is important for classifying your transactions correctly and keeping your accounts accurate.


NOTE: If you are using Xero, you must create/manage your accounts from Xero. They will be imported into DEAR when you next synchronise your accounts. You can view your Chart of Accounts in DEAR by going to Settings -> Reference Books -> Financial -> Chart of Accounts, but it will be read-only. 


Before starting your integration, some accounts must first be created in Xero. You can add more accounts to suit your business requirements – if you are unsure, consult with your accountant or bookkeeper before adding or editing any accounts. 


The accounts needed for DEAR to function correctly are listed below with their required settings:


Already created by Xero:

  • Accounts Receivable
  • Accounts Payable
  • Sales Tax (GST, VAT...)
  • Sales/Revenue


Required accounts: 

You will not be asked to map these accounts when connecting to Xero for the first time; however, they allow you to fully make use of DEAR's functionality. You can create these accounts in Xero now or create them later at a more convenient time.

AccountAccount TypeSystem AccountAccepts Payments
Inventory ControlCurrent AssetNone

Doesn't accept payments

Inventory DiscrepancyExpenseNone

Doesn't accept payments

Cost of Goods SoldDirect Cost (DEAR standalone/Xero)
Cost of Goods Sold (QBO)
None

Doesn't accept payments

Supplier Deposits/Prepayments*Current AssetNoneAccepts payments
Customer CreditsCurrent LiabilityNoneAccepts payments

*may already be created by Xero.


NOTE: Xero pre-loads a default Inventory account; however, it does not have the correct settings for DEAR to function correctly. You will have to create a new one with the settings listed above. 


Optional Accounts

Inventory Accrual/Stock in Transit (requires Inventory Accrual to be enabled)

AccountAccount TypeSystem AccountAccepts Payments
Inventory Accrual (Goods Received, Not Invoiced)Current Asset OR
Current Liability
NoneDoesn't accept payments
Stock in Transit (Goods Invoiced, Not Received)Current AssetNoneDoesn't accept payments

Gift Card Liability (requires Gift Cards to be enabled)

AccountAccount TypeSystem AccountAccepts Payments
Gift Card LiabilityCurrent LiabilityNoneAccepts payments


Creating Accounts in Xero:

  1. Access your installation of Xero.
  2. Go to Accounting -> Advanced -> Chart of Accounts.

  3. The Chart of Accounts is loaded based on the industry that you specified when initially setting up Xero. You may need to edit some account settings and/or create new accounts to make them compatible with the DEAR required accounts. 
  4. Click Add Account.
  5. Fill in the account details according to the account settings listed above (interface may vary slightly depending on the selected country). Make sure to verify that the Tax setting for each account is correct according to your country of business. Consult with your accountant or bookkeeper if you are unsure of which tax setting to use. 
  6. Save your changes and move on to creating the next account. When all required accounts are created, move on to the next section.



Connecting DEAR Inventory and Xero

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Once you have added all the relevant accounts, you can either access DEAR and connect to Xero (if you already have an account) or complete the DEAR signup process (if you don't). 


Connecting Xero when you create a DEAR account

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To connect to Xero during setup:

  1. On the DEAR website, select Create free account
  2. From the Welcome screen, select an option.
    • I need help setting up my account – this option will sign you up to a free onboarding session that helps you to set up sources for the chart of accounts, import customers, suppliers, products, and set up external integrations with eCommerce systems (sales channel), B2B and POS integrations.
    • Set up a demo company with test data – this option will populate your DEAR account with test data from our demo company. You are free to play around with this data any way you want.
    • I don't need help – this option will set up a DEAR account with empty data, meaning that you will need to set up your own data before you can start using DEAR.
  3. On the signup screen, you will be asked to enter some information about your business. In the Chart of Accounts source, select Xero.
  4. You will be taken to the DEAR dashboard, with a non-authorised Xero connection. If you chose 'I need help with setting up my account', the Dashboard will show a Sync Chart of Accounts button. If you chose 'Set up a demo company with test data' or 'I don't need help', click the Xero logo, then click Sync now.
  5.  Enter your Xero login details and authorise the connection.
  1. The Chart of Accounts and Tax Rules will be imported from Xero. Navigate to Reference Books -> Account Mapping to finish mapping your accounts correctly. See More Account Mapping for further information. 
    • DEAR can only map accounts between systems if they have the same settings. If you are missing an account, you can go back to Xero and create them (check the required account settings above), Sync, then reload the Account Mapping page.


If you are setting up DEAR for the first time, you will need to enter the opening balances from your Xero accounts into DEAR – see Manage Opening Balances for more information. 


You can continue to set up your Products, Suppliers, and Customers. Refer to the Getting Started Guide for more help getting set up.


Connecting an existing DEAR organisation to Xero

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To connect DEAR Inventory and Xero:

  1. From the left menu, click Integrations, then click the Xero option. You will be asked to log in to your Xero account if you are not already logged in. 
  2. Click Connect to start the Xero Connect Wizard. DEAR is set to keep your data by default. You may toggle the button to No and choose which data to keep or discard.
  1. Next, you will be taken to an Accounts Mapping screen. Select the matching accounts from the dropdown list.  
    • The Connect Wizard will only map accounts between systems if they have the same settings. If you are missing an account, you can go back to Xero and create them, then click Reload accounts from Xero to continue mapping.
    • You can also click the + symbol next to the account to create new accounts in Xero directly from the Connect Wizard.
  1. Next, you will be taken to the tax rule mapping screen where DEAR will attempt to map your tax rules from Xero automatically. 
    • The Connect Wizard only allows tax rule mapping sale tax rates to sale tax rates and purchase tax rates to purchase tax rates. If DEAR has tax rules that do not have an equivalent in Xero, you will have to create these tax rules in Xero first. Then, click Reload tax rules from Xero to continue mapping.
  1. You will be taken to a confirmation page. Data migration is non-reversible. Type I would like to update all transactions into the text field to confirm the connection to Xero. 

Now your accounts are synchronised between DEAR and Xero. 


More Account Mapping

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To fully enable all of DEAR's functionality, you can finish mapping the required and optional accounts. Create any missing accounts in Xero if you haven't already, synchronise your data, and navigate to Settings -> Reference Books -> Financials -> Account Mapping. Select the equivalent accounts from the dropdown list and Save your changes. 


DEAR can only map accounts between systems if they have the same settings. If you are missing an account, you can go back to Xero and create them (check the required account settings above), sync, then reload the Account Mapping page.


NOTE: You can use DEAR without completing this account mapping. If you attempt to use functions that are linked to an unmapped account, DEAR will report an error and may be unable to complete the operation.



Xero Integration Settings

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Once your DEAR Inventory account is set up, you'll be able to locate the Xero Integration page by selecting Integration from the righthand menu, then Xero


The Xero Integration page will contain the details of the integration on the lefthand side of the page, which explain the flow of data between DEAR Inventory and Xero.


Created in Xero, Sent to DEAR

  • Chart of Accounts: Any changes in the Chart of Accounts in Xero will be synced to DEAR. Chart of Accounts is read-only in DEAR.
  • Tax Rules: Tax Rules are created in Xero and synced to DEAR. Changes in either Xero or DEAR are synced both ways. See more information about Tax Rules.
  • Company Addresses


Created in DEAR, Sent to Xero

  • Purchase Credit Notes: Credit Notes authorised in DEAR will be exported to Xero, but won't be allocated against invoices. Credit Notes created in Xero are NOT picked up by DEAR.
  • Purchase Orders: Purchase Orders can be optionally exported to Xero.
  • Credit Memos and Sale Credit Notes: Credit Notes authorised in DEAR will be exported to Xero, but won't be allocated against invoices. Credit Notes created in Xero are NOT picked up by DEAR.
  • Transaction Journal Entries: DEAR will create Manual journals in Xero to reflect COGS (optional), Assembly, Disassembly, Stock Adjustment, Stock Transfer, Inventory Write-Off and Purchase/Sale manual journals transactions.


Can be created in both, Synced both ways

  • Bill/Sale/Purchase Payments or Refunds: Payments and Refunds may be exported/imported from Xero or synced both ways depending on the configuration setting.
  • Suppliers: Synced with Xero Contacts.
  • Customers: Synced with Xero Contacts.
  • Products/Items: Products, created or updated in DEAR, are always pushed to Xero. Items and modifications to items in Xero can optionally be exported to DEAR.  
  • Bills or Purchase Invoices: Invoices authorised in DEAR will be exported to Xero. Invoices authorised in Xero will be picked up by DEAR (optional).
  • Sale Invoices: Invoices authorised in DEAR will be exported to Xero. Invoices authorised in Xero will be picked up by DEAR (optional). Sale Quotes are not exported. 


Within the Xero Integration page, you can control whether your integration is enabled or disabled, whether payments are pushed to Xero or pulled from Xero (see more), and modify any other integration settings. We recommend taking a look at your settings before putting through new transactions. 


From the Integration Settings screen, set the following options:

  • Xero Invoice Status: When credit notes and invoices (purchase invoices, sale invoices, and consolidated sales) are exported, this option determines what status (draft or authorised) will be set for new Xero invoices/credit notes. This status is then used when the item is exported as a DEAR document.
  • Xero Payments are: Set the direction for payment synchronisation between DEAR and Xero. Payments can be synced both ways (from Xero to DEAR, and from DEAR to Xero) or only in one direction as desired. Note that if this is set to Sync both ways or Pull from Xero, DEAR will not import payments from consolidated invoices. You will need to process payments manually in DEAR.
  • Export COGS: Allows you to enable or disable the exporting of cost of goods sold transactions to Xero. COGS transactions are created by DEAR automatically when the Ship stage is authorised on Sale. You can manually void/recall export of these transactions from Xero with the COGS Maintenance tool. 
  • Export purchase orders to Xero: Allows you to enable or disable the exporting of purchase orders to Xero. 
  • Show journals on cash basis reports: When DEAR exports COGS and Manual Journals, this value is added to Xero’s Manual Journal record (ShowOnCashBasisReports property).
  • Treat all Xero Contacts as Customers: If this option is enabled, customers and suppliers from Xero will be created as Customers in DEAR. If disabled, Customers are created as Customers and Suppliers are created as Suppliers. 
  • Category 1 and 2: These are tracking categories. When transactions are exported to Xero, additional tracking information can be included with these transactions (for example, you could add information about Sale Reps, Product Brand or Categories, Customer or Product attributes, etc.). For more details, see Xero - Set up Tracking Categories
  • Load items from Xero: If this option is enabled, items (products) are loaded from Xero to DEAR.
  • Load Invoices from Xero: Allows you to load purchase and sale invoices from Xero. Invoices are only loaded if they have not been loaded before. Sale invoice numbers must be unique in DEAR. Purchase invoice numbers must be unique for a particular supplier. Enabling this setting makes visible the following options:
    • Auto-receive stock when loading purchase invoices from Xero: Determines if stock receiving is created when a purchase is imported from Xero, or if the purchase will be created without stock receiving, with the stock receiving being done manually. See Processing a Purchase for more information. 
    • Location to be used for purchases and sales loaded from Xero: The default location for sales and purchases imported from Xero.
    • Fulfilment mode when loading sales invoices from Xero: Determines the fulfilment status for imported sales. The following options are available: No Picking, Auto Pick, Auto Pick + Pack, and Auto Pick + Pack + Ship.
  • Export attachments to Xero: Allows you to export sale and purchase attachments (attached documents) to Xero.
    See Xero - Advanced: Export Attachments to Xero for more information on this feature. 
  • Auto-synchronisation: Allows you to enable or disable auto-synchronisation with Xero. Auto-synchronisation automatically starts a sync process. You specify the start date and start time for the first sync, the sync frequency (2, 4, 8, 12, or 24 hours), and how errors (if any) will be reported (email or internal messages).


Consolidating Sales on Export

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Sales can be consolidated and grouped per channel prior to exporting them to Xero. When you select a channel for sales consolidation, instead of individual invoices/credit notes, all invoices/credit notes with the same date, currency, tax inclusive/exclusive indicator, shop name and sales channel will be consolidated into a single daily invoice/credit note. These consolidated documents are then exported to XERO during a manual or automatic synchronisation process with the name format "SO-<Date>-<ShopType>(<ShopName>)-<UniqueNumberForThisDateShopTypeAndShopName>". Eg: SO-2019/04/26-Shopify(MyShop)-1".



To configure consolidated sales in DEAR:

  1. From the left menu, click Integrations, then click the Xero option.
  2. On the Xero Integrations page, scroll down to the Consolidated Sales section, and select the channel for which sales are to be consolidated.
  3. Click the View consolidated invoices and credit notes link to open the Consolidated Sales page.
  4. On the Consolidated Sales page, all consolidated sales and credit notes are listed.
  5. Look for a specific sales record by typing either of the following items in the Search bar at the top right of the page:
    • the record's document number in DEAR
    • the consolidated number in Xero.

TIP: You can click any of the column names on the page to automatically sort the sales records in ascending or descending order. If applicable, click the navigation buttons at the bottom to navigate between pages.


NOTE: 

  • The period for consolidation is always one day. Payments, Refunds and Customer Credits will be consolidated and added in DEAR. 
  • Xero payments from consolidated sales won't be imported into DEAR. You will need to process payments manually in DEAR. 
  • Void or Undo cannot be performed on consolidated invoices in DEAR since these operations will cause discrepancies in the exported data. You need to create a credit note or invoice to offset the sales to void or undo.


Performing Cost of Goods Sold Maintenance

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IMPORTANT: These features are for maintenance purposes only. Exporting is automatically performed daily.


You can manually export COGS transactions, or void (recall) previous exports, for a specific period using the options in the Cost of Goods Sold Maintenance section. Simply specify the time you want to adjust (the selected dates are included in the period), then click either the Export COGS to Xero or Void COGS in Xero button, depending on the action you're taking.



Connecting to Another Xero Organisation

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If you decide to connect DEAR to a different Xero organisation, click the Change Organisation button. You will be walked through the Xero Connect Wizard to finish account and tax mapping. This is essentially the same process as connecting to Xero for the first time. 


See Switching Accounting Integrations and Xero Connect Wizard for more information. 


Disabling Your Xero Integration

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If you decide that you want to remove the integration between DEAR and Xero permanently, click the Disable Integration button, as shown below.



Exporting Data from DEAR to Xero

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You can export historical data from DEAR to Xero, which registers all documents and related items (products, vendors, customers, etc.). You might use this feature if you want to export all data to Xero for a particular date range. Simply select a start date and then click the Export Historical Data button, as shown below.


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