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Xero Late Claims calculation logic and how to reproduce it using journals

· 2 min read
Shan Xiao
Shan Xiao
Developer & Bookkeeping Learner

1 Introduction​

Late claims are transactions that you approve, edit, void, or delete in Xero after you have finalised the GST return for that period. That means there are two scenarios:

  1. After finalising the GST return, you discover you missed a transaction.
  2. After finalising the GST return, you discover an error and correct it.

Either scenario will result in a late claim.

2 How Xero Late Claims Work​

Late Claims in Xero refer to expenses or income that are recorded in a period after the one in which they actually occurred. This often happens when receipts or invoices are submitted late, after the books for the original period have been closed.

Calculation Logic :

  1. Identify the Original Period:
    • Determine the period in which the expense or income should have been recorded.
  2. Identify the Actual Posting Period:
    • Note the period in which the transaction was actually entered into Xero.
  3. Calculate the Adjustment:
    • The difference between the original and actual periods is the basis for the late claim adjustment.
    • Xero typically posts an adjusting journal to move the expense/income to the correct period for reporting purposes.

3 How to Reproduce Using Journals​

  1. Create a Manual Journal:
    • Debit or credit the relevant expense/income account in the original period.
    • Offset the entry with the appropriate account (e.g., accruals, payables, or receivables).
  2. Reverse the Journal in the Actual Period:
    • In the period when the late claim is actually posted, reverse the original journal to avoid double-counting.

4 Legal requirement - TODO​

5 Example​

  • Scenario: An expense incurred in March is submitted and entered in April.
  • Step 1: In March, create a journal:
    • Debit: Expense Account
    • Credit: Accruals
  • Step 2: In April, when the actual expense is posted:
    • Debit: Accruals
    • Credit: Expense Account

6 Conclusion​

By understanding and manually reproducing Xero's Late Claims logic, you can ensure accurate period reporting and compliance with accounting standards. This approach is especially helpful for audits and for organizations not using Xero but needing similar functionality.

Reference​