Apply prepayment credit to existing invoice or bill

Here's how to apply a prepayment to an existing invoice or bill.

  1. Go to Accounts, then Sales (if prepayment received) or Purchases (if prepayment paid).
  2. On the Awaiting Payment tab, click the prepayment Prepayments icon..

    Image showing prepayment on Awaiting Payment tab

  3. Click Prepayment Options and select Allocate Credit.
  4. Xero displays all unpaid invoices or bills for this contact. Enter the amount to credit to each invoice or bill.

    You can allocate less than the full amount of the prepayment, for example if the prepayment is more than the amount of unpaid invoices or bills.

    Image showing allocation of outstanding prepayment.

  5. Click Allocate Credit.


If the Allocate Credit option doesn't appear in the Prepayment Options menu, please check that the contact name used by the prepayment and invoices or bills are the same.

  • If the contacts are different, edit the prepayment, invoice or bill so all use the same contact.
  • If you have duplicate contact records, merge or archive the duplicate contact record.