Xero and Clio

Xero is a cloud-based accounting software. With Clio's integration with Xero, you can sync your Clio contacts, time and expense activities, bills, credit notes, interest, and Clio Payment transactions to Xero for accounting purposes.

Integration at a glance

Clio's integration with Xero allows you to seamlessly integrate your firm's accounting with Xero. During the initial setup, contact and bank account data are automatically exported from Clio. You can then customise your sync settings to control how other data flows between the two platforms.

Bidirectional data flows between Clio Manage and Xero

1. In Clio Manage, create or edit a contact:
   • Contact syncs to Xero once an invoice is created in Clio Manage. After the initial setup, contact edits sync bidirectionally between Clio Manage and Xero.
2. In Xero, edit a contact:
   • After the initial contact sync, that contact updates in Clio Manage.
3. In Clio Manage, record expenses:
   • The expense syncs to Xero as a "spend money" transaction.
4. In Clio Manage, approve bills:
   • Bills sync to Xero. If you uncheck Only sync bills after they are approved in Clio during setup, all Clio invoices sync to Xero.
5. In Clio Manage, edit an approved bill:
   • The bill updates in Xero.
6. In Xero, edit a synced bill:
   • The bill updates in Clio Manage, provided bidirectional sync is enabled.
7. In Clio Manage, pay the bill:
   • The bill is marked as paid in Xero, and the income is recorded in the corresponding bank account in your Xero Chart of Accounts.
8. In Xero, pay a synced bill:
   • The bill is marked as paid in Clio Manage.

Set up integration

To sync data between Clio and Xero, you first need to configure your Xero Chart of Accounts and then connect the two platforms. After the connection is established, data will sync automatically.

Step 1: Set up Xero Chart of Accounts 

1. Go to Xero
2. Set up your accounting ledgers in your Chart of Accounts.
3. Optional: Add sub-accounts to your Xero Chart of Accounts. You can match the Xero account code to time and expense categories in Clio Manage.

Step 2: Start initial sync: 

1. Go to Settings > Bill Syncing.
2. Click Connect next to Xero.
3. Click Link Xero Account.
4. Log in to Xero and authorise the integration.
   • The contact sync is automatic after linking Xero and Clio.

Configure Xero sync settings

After connecting Clio Manage and Xero, you can manage the sync settings from the Xero sync page in Clio Manage (Settings > Bill Syncing > Xero Settings) to control how contacts, invoices, payments, and expenses synchronise with Xero. The settings on this page are divided into sections for contact sync, invoice sync, payment sync, and disbursement sync.

Contact sync

• Contacts in Clio Manage automatically sync to Xero after the initial integration setup.
• The checkbox labelled Add a unique ID to your contacts to eliminate sync errors when multiple contacts have the same name is automatically enabled.

Invoice sync

1. Go to the Xero sync page in Clio Manage (Settings > Bill Syncing > Xero Settings).
2. To turn on invoice syncing, toggle on Sync invoices.
3. Optional: To get updates from Xero back in Clio, check the box for Sync invoice edits from Xero to Clio.
4. Choose which invoices to send from Clio to Xero:
   • To send all invoices, select Sync all invoices created in Clio to Xero.
   • To send only approved invoices, select Only sync invoices to Xero after they've been approved in Clio.
5. Optional: To sync credit notes with tax from Clio, check the box for Create credit notes in Xero inclusive of tax.
   Note: When this box is checked, the tax rate on credit notes is determined by the Clio invoice tax settings. If unchecked, credit notes sync exclusive of tax, which may increase the value in Xero reports if the Xero account has a preset tax rate.
6. Continue to review Xero payment sync settings.

Payment sync

When configuring the invoice settings in the Xero sync, you can manage how to sync payment transactions between Clio and Xero. If you have enabled multicurrency billing, you can match GBP and USD payments to separate accounts. 

1. To sync payment transactions, select a Xero bank account under Match Clio payments to Xero bank account.

   Important: Xero bank accounts must have unique codes to sync with Clio. Learn more about setting up unique codes in Xero here and the chart of account components here.

2. Optional: To reflect payment updates from Xero back in Clio, check Sync bill updates from Xero to Clio, and select a bank account.
3. If your firm has multi-currency billing, you can map specific currencies:
   • Under Match GBP payments in Clio to Xero bank account, select the appropriate Xero bank account for British Pound Sterling payments.
   • Under Match USD payments in Clio to Xero bank accounts, select the relevant Xero bank account for United States Dollar payments.
4. Choose the date range to sync bills from Clio to Xero. Otherwise, leave the default to sync all invoices.
5. Click Update Sync Settings.

Enable disbursement expenses sync

Accurate classification of disbursement and recovery expenses is essential for law firms for business intelligence, compliance with audits by law societies or bar associations, and tax reporting. The section below will help you understand billable expenses and ensure accurate data.

Disbursement

Disbursements are expenses paid on behalf of a client to a third-party vendor. Anticipated disbursements are disbursements you can sync to Xero with a bill to then appear as a credit in the Xero Cost of Goods Sold account until linked to a payment from your bank account to the third-party vendor. Examples include:

• Court filing fees
• Translator fees
• Medical records

 Expense recovery

Recoveries are indirect expenses that do not involve payments to third-party vendors. Examples include:

• Photocopying costs
• Postage fees

Before you can sync hard costs with Xero, enable expense tracking in Clio Manage. Once enabled, categorise all new expenses as disbursements, anticipated disbursements, or expense recoveries to maintain detailed expense records. If you disable this feature, existing expenses will remain unchanged, but future expenses will default to generic expenses without classification.

To enable or disable the disbursement sync:

1. Go to Settings > Bill Syncing > Xero.
2. To enable, confirm the box for Sync bills from Clio to Xero is checked.
3. Under Sync Disbursement Expenses, check the box for Sync Hard Cost Expenses.
4. Select a date for when disbursements should sync from Clio to Xero, the disbursement expense account in Xero, and the Xero account for the bank account.
5. Optional: Select Sync tax data on disbursement to Xero Spend Money Transaction

   Note: Firms in AUS, UK, NZ, or South Africa can enable sync tax data on disbursement to Xero Spend Money Transaction. Clio will map tax rates (either primary or secondary) to the set default tax rates in Xero.

6. Click Update Sync Settings.

Sync tax data on disbursements 

Firms in Australia, the UK, New Zealand, or South Africa can sync tax data on disbursement to Xero Spend Money Transaction. Clio will map tax rates (either primary or secondary) to the following default tax rates in Xero.

Manage credit notes and VAT

In Clio Manage, a credit note or a write-off is tracked as a non-revenue-generating payment. In Clio, VAT charges apply to the total bill before deducting a credit note or write-off. Before you can sync credit notes to Xero, you need to select an account to accept the payment. You can track credit notes in Xero in either a Revenue or Asset account, depending on the mapping with your Xero account.

To properly reflect VAT, you can edit the credit note in Xero to be tax-inclusive or match credit notes to an Xero account with a tax rate of 0%.

Match time and expenses categories

You can use activity categories in Clio Manage to map your time and expense entries to specific accounts in your Xero Chart of Accounts. This helps you get more detailed financial reports when you invoice clients.

1. Add accounts in Xero:
   • Go to Xero > Accounting > Chart of Accounts.
   • Add accounts and assign each account a unique code (e.g., 200 - Legal Fee Income, 430 - Travel Expenses).
   • For expense accounts, click Show in Expense Claims.
2. Edit or create an activity category in Clio Manage
   • Go to Activities > Activity Categories.
   • Under the Actions column, click Edit or select New category in the top right.
3. Select the Xero account code:
   • In the activity category modal, select the account from the Xero account code dropdown.
4. Click Save category.
   • This applies to new invoices only.

View sync errors

You can view sync errors, including disbursements, contact, and bill sync errors, on the Xero settings page in Clio Manage. Similar errors will be grouped together. You can access the relevant records by clicking the link below the error. Where possible, the error message will tell you the source of the issue and give advice on how to fix the error.

1. Go to Settings > Bill Syncing > Xero.
2. Select the Status tab.
3. Scroll to Sync Failures to view grouped errors.
4. Use the links provided to address the issues in Clio or Xero.
5. Optional: To stay updated on sync issues, set up email notifications for sync errors under Notification > Settings > Integrations.

Perform client funds reconciliation

Due to limitations in Xero, client funds account transactions cannot sync from Clio to Xero. To perform client funds account reconciliation, you can generate the client funds ledger, client listing, and bank account activity reports in Clio and then compare the amounts to your bank statement or the information in Xero.

1. In Clio Manage, go to Reports > Reports.
2. Click Client under Categories.
3. Select the Client ledger report.
4. Choose your parameters
5. Select Generate report.
6. Repeat steps 2, 4, and 5 for the client funds ledger and bank account activity reports.
7. Go to Xero and compare the amounts.