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@Alison

That’s a solid workaround, especially using the supplier statement to check everything lines up.

We ran into the same issue though - it helps with reconciliation, but doesn’t really answer what you’re actually paying.

Once you’ve got a lot of bills and credits for the same supplier, having to apply credits first and then figure out what’s left to pay gets messy pretty quickly.

We ended up giving Batchly a go after seeing it mentioned, and it’s been a lot easier having credits applied during the payment run instead.

You can see exactly what you’re paying per supplier, and the remittance shows which credits were used against which bills.

This should solve most ppls issues that have posted in this thread.

In case it's of use to anyone in UK with large volume of credit notes, HMRC does allow for the posting of suppliers statements where the tax rate is all the same. You could also use Dext to upload both invs and CNs and then upload the supplier statement, which Dext can check off and highlight any missing, only adding the supplier statement then into Xero.

I appreciate this is not a solution for all, but it could be a game-saving workaround for same to consider.

I have to allocate a day to sort out credits at the end of the month. Batch allocations would save alot of time and money.

Here’s how we’re handling it - everything shown in one place, including fully credited bills.

1000000% this would be useful! Please, please introduce this

I was also having issues here when paying a monthly supplier, and trying to bulk apply credit notes. But have selected all to pay in bills, including credit notes, and made a batch payment from the bank (Even though you cannot 'pay' credit notes), when you go to reconcile the transaction line in xero once it has cleared the bank account, select 'show received items' and this should then show the credit notes that you can select to apply against the amount, as it defaults to showing AUD items only.

Agree with what’s already been said here — the manual allocation side of this is painful once you’re dealing with multiple bills and credits.

Where it really breaks down though is the payment step.

You end up having to sort all allocations first just to get to a point where you can run a clean payment, and then double check what’s actually being paid vs offset.

We started looking at this differently — instead of treating allocation as a separate task, handling credits as part of the payment run itself.

That shift removed most of the manual prep and made it much clearer what cash is actually leaving the bank.

We’ve been building this into Batchly (https://batchly.io) off the back of our CFO dealing with this exact issue month after month.

Keen to see if others are approaching it this way or still working through allocations upfront.

UK User here - We have seen the roll out last week of being able to allocate credit notes along with invoices on the Bank reconciliation function - this is a very welcome change !! Why have Xero not communicated this change as users have been asking for years & years and only be being vigilant and seeing the feature ourselves did we discover this. PLEASE LET EVERYONE KNOW THIS IS A GAME CHANGER FOR SO MANY OF US !!!

This keeps coming up. The pain isn’t just the clicks - it’s that once credits sit outside the batch payment flow, everything gets harder to follow. More prep before the run, more checking after, and more explaining when someone asks what was actually paid.

Feels like the obvious fix is to let bills and credits sit in the same run, show the net payment clearly, and keep the audit detail in the background.

We’ve been working through this in Batchly with a few customers for exactly that reason. Keen to hear how others are handling it.

All we want is to be able to pick up a credit note when allocating a payment the same as you pick up invoices to allocate. Instead you have to go to the credit note, allocate it against an unrelated invoice then back into allocation screen. Why on earth does your software insist on allocating a credit note to an invoice? This makes no sense, as quite often the credit doesn't even relate to an invoice. It's a basic accounting function which has me flummoxed as to why you set it up in this way.

Hi Michael,
Awesome, thank you very much for the advice! This is really helpful — I’ll give it a shot.

also I fixed the limit on having over 200 items shown per page

Our admin spent many hours applying 100's of credit notes a month, now I use Allocat.io and it takes 1 minute to auto apply, reasonably priced too, and sadly I don't need my admin anymore

I have 91 invoices issued ,the client made a mistake , now I have to apply 91 credit notes for a portion of each invoice. A bulk allocation would save me hours of work , please consider this thanks

Good day Xero Product Development Team,

I trust that you are well, and I wish you all the best for 2026.

At present, this remains a challenge and is impacting client adoption, as customers are reluctant to migrate from their existing systems where this functionality is currently available.

Could you please advise whether there is a scheduled sprint or an estimated timeline for when this feature is planned to be implemented?

The reason for my enquiry is to determine whether we should plan to develop this functionality within a third-party application should it not be on the near-term roadmap.

I look forward to your guidance.

Kind regards,
Hendrik de Vos

Good day Xero Product Development Team,

We are experiencing the same challenge with our client, who migrated from a server-based system that had this capability. We would greatly appreciate it if this feature could be expedited.

Additionally, we require that this functionality be available through the API, not just via the CSV import function.

Kind regards,

I agree with everyones comments. It would be great to have the bulk credit allocation. So time consuming to allocate to individual invoices.

You guys are clearly not accountants who create these systems. Our company is sitting with 7000 unallocated credits, (customer jnls) so no we cant allocate them on the bank - each credit goes to one invoice not multiple. So you are completely missing the point. There should be and option where the credit amount should auto match an invoice with same amount from oldest to newest. ALMOST all accounting systems have this. You platform is so great but lacks BASIC accounting input criteria. and the fact that it will only be considered in the long run is ridiculous.

While it is appreciated that finally Xero have commented on this "idea" (I would call it basic functionality of any accounting system) it is extremely disappointing that Xero are not recognising the importance. It is not a nice to have, it is vital for accurate accounts and everyone's sanity.

It is hard to explain to clients that this is not possible when it was available in their previous software as a basic feature.

Please stop wasting development time on things people are not complaining about and sort this!

Disappointing that this is not being looked at now. Aside from the time it takes to allocate these credit notes, how can an accurate remittance be sent to a supplier??