Xero Connection

Xero is an online accounting software that gives you the option to push invoices and payments from RoomRaccoon. With the Xero connection to RoomRaccoon, you can choose if you want only the invoices sent should you want to add the payments manually.

When RoomRaccoon pushes payments to Xero this minimises the manual labour of allocating payments and reduces the risk of human error through automation.

Sync Methods: Invoice-based vs Journal-based

When connecting RoomRaccoon to Xero, there are two ways financial information can be synced:

1. Invoice-based Sync (creating invoices and linking payments).

2. Journal-based Sync (creating a transaction list by account codes).

1. Invoice-based Sync (Invoices & Payments)

With this method, RoomRaccoon sends guest invoices directly into Xero. When a payment is collected, it is also posted and linked to the invoice.

NOTE: No payment will be sent without being linked to an invoice in RoomRaccoon.

Example:

• Room charge: €200

• City tax: €20

• Guest pays €220 by credit card

• OTA charges €20 commission

Accounting entries

Invoice created

• Debit: Accounts Receivable (Guest) → €220

• Credit: Room Revenue → €200

• Credit: City Tax Payable → €20

Payment recorded

• Debit: Bank (or Credit Card Clearing) → €220

• Credit: Accounts Receivable → €220

Commission expense

• Debit: OTA Commission Expense → €20

• Credit: Bank (or Credit Card Clearing) → €20

This approach gives you full guest-level visibility in accounting (who owes what, which invoices are paid).

2. Journal-based Sync (Transaction List)

With this method, RoomRaccoon sends summarised journal entries instead of individual invoices. These journals are usually grouped by day. RoomRaccoon remains the system of record for invoices and payments (i.e. debtor management).

Example:

• Room charge: €200

• City tax: €20

• OTA payout: €200 net (after €20 commission)

Journal entry:

• Debit: Bank → €200

• Debit: OTA Commission Expense → €20

• Credit: Room Revenue → €200

• Credit: City Tax Payable → €20

This approach gives you a clean financial breakdown without guest details.

Which Method Should I Use?

Summary

• Invoices & Payments: Use if you want guest balances and invoices in your accounting system.

• Transaction List (Journals): Use if you want clean summaries and leave guest-level detail in RoomRaccoon.

Both methods are valid, the right choice depends on your accountant’s workflow and reporting needs.

How to Connect to Xero

1. Log in to RoomRaccoon and authorise the connection using the link provided by RoomRaccoon.

2. This link will redirect you to the Xero Login page where you will need to grant RoomRaccoon permission “Allow Access.”

3. In RoomRaccoon, add all of the mapping.

4. Add ledgers e.g. accommodation, food, beverages, add-ons etc.

5. Add payment ledgers (such as credit card payment for example).

Benefits of Using Xero

• Get your books done faster: Xero can automatically handle tasks that used to take up all of your time. From importing bank transactions to sending invoice reminders.

• Feel confident in your numbers: with all your data stored safely in one place, it’s easy to get a snapshot of how your business is tracking. You can also invite your accountant or bookkeeper into Xero.

• Do business from anywhere, on any device: access all your data and Xero tools from anywhere by connecting to the internet, or via Xero’s mobile app.

Limitations of the Xero Connection (Invoice-based)

Please be aware of the following limitations when using invoice-based payment syncing with Xero:

1. Overpayments

Overpayments cannot be sent to Xero (if the total of the payment is more than the amount invoiced). The recommended approach is to invoice the full amount and then generate a credit note in Xero for the refunded or cancelled amount, then reconcile the refund in Xero.

2. Negative Payments (Refunds)

Negative payments (refunds) cannot be sent to Xero. You will still be able to add the refund amount in RoomRaccoon, however this amount will not be pushed to Xero. Refunds must be handled manually in Xero.

3. Accommodation Revenue Ledger Mapping

Accommodation revenue can only be sent to a single ledger in Xero. The exception is where different VAT percentages apply (e.g. long-stay reservations), in which case a separate ledger can be used for that VAT rate.

4. No Negative Balances

Xero does not accept negative balances (e.g. refunds). As such, refunds must be handled manually in Xero.

5. VAT Percentages

RoomRaccoon does not send VAT percentages to Xero. VAT rates must be configured directly in Xero. RoomRaccoon sends revenue totals only and links ledger codes to the Chart of Accounts in Xero.

6. Payment Deletion

You are unable to delete payments from a reservation in RoomRaccoon if the payment has already been pushed to Xero. RoomRaccoon is also unable to remove payments from an invoice in Xero. The hotelier must delete the payment in Xero first before RoomRaccoon can resend it.

Common Errors & Solutions

If you experience any errors in the account dashboard, below is a list of the most common errors with simplified explanations.

Error: A validation exception occurred (Account type is invalid for making a payment to/from)

Solution: The hotelier needs to enable payments to their accounts in Xero:

1. In the Accounting menu, select Advanced, then click Chart of accounts.

2. Click the account to open its details.

3. Select “Enable payments to this account.”

4. Click Save.

Error: AccountCode is mandatory and is either missing or empty

Solution: When setting up a Chart of Accounts in Xero, an account code is optional in the UI but is required for API connections. The hotelier can fix this in their ledger settings:

1. In the Accounting menu, select Advanced, then click Chart of accounts.

2. Click on the name of the account to edit it and add an account code.

Error: Payment amount exceeds the amount outstanding on this document

Solution: This is due to overpayment on the invoice. The Xero connection cannot push a tax invoice if the invoice has been overpaid. You will need to credit note the entire invoice and make sure the revenue (accommodation & add-ons) balances with the payment posted and linked to the invoice.

Error: There is no amount due on the linked invoice

Solution: The hotelier should check whether the payment has already been sent to Xero. If so, please contact a Customer Success Manager for assistance in clearing this error.

Good to Know

• Payment ledgers are not mandatory, however at least one payment ledger must be present.

• A sales ledger named “other” is required to capture unallocated items.

• You are unable to delete payments from a reservation if the payment has already been pushed to Xero.

• RoomRaccoon is unable to remove payments from an invoice in Xero. The hotelier must delete the payment in Xero before RoomRaccoon can manually resend it.

• Xero does not accept negative balances (e.g. refunds). Refunds must be handled manually in Xero.

• RoomRaccoon does not send VAT percentages to Xero. The hotel must set up VAT percentages in Xero directly, as RoomRaccoon only sends totals and links ledger codes to the Chart of Accounts.