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.

Set up integration

Before you can begin syncing data between Clio and Xero, you need to establish a connection between the two platforms. Once set up, the data automatically syncs between the two platforms. This section will guide you through the initial setup process, configuring the sync for invoices and payments, and setting up the hard cost expense sync.

Contact and bill syncing is bidirectional (Clio bills only), which means that any changes made in Clio will update in Xero, and changes in Xero will update in Clio. On the other hand, bank accounts sync one-way from Clio to Xero, meaning that changes in Xero will not be made in Clio.

To start the 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.

Set up bill and payment sync

To ensure that your bills, payments, and entries sync correctly between Clio and Xero, you will need to configure the sync settings. You can choose which bills to sync and how they are categorised in Xero. You can also enable edits in Xero to sync back to Clio, ensuring that updates in Clio do not overwrite changes made in Xero.

After this initial setup, any invoices you create, edit, add a payment, or add a credit note in Clio will sync to Xero every five minutes. Xero edits to Clio bills also sync every five minutes.

1. Go to Settings > Bill Syncing > Xero.
2. Check the box for Sync bills from Clio to Xero. 
3. Optional: By default, only unpaid, approved and paid bills will sync to Xero. If you want to sync draft and voided bills, uncheck the box for Only sync bills that are "Unpaid" or "Paid."
4. Select the appropriate Xero account for time entries, expenses, interest, and credit notes. These entries will be imported into the selected account.
   
   • Clio will only recognize a Xero account using the Xero account code. You can configure account settings in the Xero platform in your chart of accounts. Consult your accountant if you have questions about which accounts you should link to Clio.
5. To sync payment transactions, select a bank account under Match Clio payments to Xero bank account. Select None if you do not want to sync any payments to Xero.
   • Clio will only match bank accounts with unique codes. To match your Xero bank account to Clio, edit the bank account in Xero and add a unique code. Learn more about editing your bank account in Xero here and about Xero's unique codes and chart of account components here.
6. Optional: If you would like updates made to bills synced into Xero to sync back into Clio, including payments from Xero to Clio, select Sync bill updates from Xero to Clio and select a bank account under Match payments in Xero to Clio bank account. 

   Note: This Xero bill sync setting respects Clio bill settings, allowing edits on approved invoices (Billing Settings) and syncing data only on ‘Unpaid’ and ‘Paid’ invoices (Xero Sync Settings).

7. Select the date range for when invoices should sync from Clio to Xero.
8. Click Update Sync Settings.

Understand disbursement expenses and expense recoveries sync

Disbursements and expense recoveries are essential for law firms to classify expenses accurately, which is important 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 the data is accurate.

Disbursements

These are expenses paid on behalf of a client to a third-party vendor, such as court filing fees, translators, or medical records. In the EU and the UK, hard costs are referred to as disbursements.

Expense recoveries

These expenses are not directly related to payments made to third-party vendors, such as photocopies or postage.

After you record an expense in Clio, Xero automatically records a "spend money" transaction to record billable expenses. Key fields you can use to help record a spend money transaction are as follows, which must be accurately entered to ensure correct accounting. Learn more about "spend money" transactions in Xero here.

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.

Sync disbursement expenses and expense recoveries

Syncing disbursement costs between Clio and Xero allows for automatic expense recording without manual entry in both platforms. This sync is one-way, meaning that changes in Xero will not reflect in Clio, but changes in Clio will update Xero.

Only users with administrative permissions can enable or disable the tracking of disbursements and expense recoveries in Clio. Once set up, Clio will sync to Xero approximately every 15 minutes. Updates made to disbursements in Clio will be reflected in Xero unless the transaction has been reconciled in Xero. If a disbursement is deleted in Clio before the next sync, it will not be reflected in Xero. If you delete a disbursement after the sync, you will need to delete it manually in Xero.

1. Go to Settings > Bill Syncing > Xero.
2. Ensure the Sync bills from Clio to Xero box is checked.
3. Under Sync Hard Cost 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.
   • All disbursements created on or after this date will sync to Xero.
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.

Toggle disbursements and expense recoveries in Xero

If you disable disbursements and later turn them back on, the expenses will return to their original classifications. When enabled, previously created expenses remain unchanged, but all new expenses must be categorised as either disbursements or expense recoveries. If disabled, all expenses will revert to generic expenses, and future expenses will not require classification as hard or soft costs.

1. Go to Settings > Billing > Expenses in Clio.
2. Toggle the settings on or off based on your firm’s needs.
3. Ensure that the Sync bills from Clio to Xero box is checked. Under Sync Hard Cost 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.
   • All disbursements created on or after this date will sync to Xero.
5. Click Update Sync Settings.

View sync errors

You can view sync errors, including disbursements and invoice sync errors, on the Xero settings page in Clio Manage.

1. Go to Settings > Bill Syncing > Xero.
2. Scroll down to Sync Failures (under Sync Status) to view errors.

Perform client funds reconciliation

Due to limitations in Xero, client funds account transactions cannot be synced from Clio to Xero. If you need 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.