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Oh, this is getting more and more important. The AI features don't always pick up that a bill is a credit note, which means that the automation is time-consuming in that we have to download the bill. Re-import it and tag it as a credit note. Where a simple button in the "approve and view next options could ask if we want to convert the bill into a credit note OR... the option to put a minus value on the amounts, to automatically convert the document to a credit note. Really hope this gets more support.

For anyone with supplier credit notes stuck in drafts as bills: I built a small Chrome/Edge extension that converts them (not affiliated with Xero). Tick the drafts on the Bills list and each one becomes a draft credit note with the same supplier, lines, date and PDF. The draft bill is only deleted once the credit note is saved, and nothing gets approved. It runs in your browser, only on Xero's pages. rulemover.com/convert-xero-bill-to-credit-note

Not that this is a solution, but as a workaround to avoid manually creating the credit note and uploading the PDF, you can forward the credit note to the Documents inbox and create the credit note from there.

It would be great to see Xero incorporate the same functionality directly within the Bills workflow. This would save time and remove the need for the extra workaround.

I honestly would have expected this to be a strandard function. Imagine my surprise when I found out that we have to manually enter a credit note and upload the corresponding pdf, despite the fact that we can simply forward and bill we get in our inbox for processing.

Agree with Herora, please can we have this sooner rather than later.

Seriously - please stop trying to make a game of this. Enough users have already indicated the need is real and other platforms already provide this service.

get on with it already!

You can do this in MYOB. If the invoice is a negative balance, it automatically becomes a credit note. The same also applies for a bill.
One of the problems in Xero is that it can't handle negative quantities. Again, in MYOB, you can set the qty to be -1 and keep the same item price, but the value would then become a negative.
As an example, a qty of -2 on a $10 item would give an invoice total of -$20, which then becomes a credit note and the tracked item will place the 2 items back into stock.
As Xero doesn't allow negative quantities, the qty will need to be 2 and the item value set to -$10 to get an invoice value of -$20. However, this will just remove another 2 items out of stock, which would throw out the stock balance.
For this idea to happen, I think it would be getting Xero setup to accept negative item quantities first, then being able to convert an invoice into a credit note should then become possible.

A vibe coder could do this in 2 mins

Every now and then I check the ideas forum to see if XERO has moved on this. Its a basic function that is missing and well overdue to be implemented. Wish XERO would read the room. I leave credits sitting in draft for way too long cause it is absolute torture to download, delete, upload and enter.

If Dext can do it, why can't Xero? This should be a basic function.

Please update the program to read and upload credit notes/adjustments from suppliers when emailed into drafts.

Thank you for bringing this up Charlotte.

Xero Team, we would really appreciate the software recognising a credit note as it is received in bills as well. I hope this feature can be introduced in the near future.

How many people need to vote for it to be actioned? I see there have been 102 votes already

It won't be only good, it is critical. It is frustating to have to download the credit note, delete the invoice, and then enter manually the credit note.

The email to bill should recognise the credit note in the first place

I searched this to see if it was a thing and seems others feel the same. This is a regular occurrence and having this option would be very beneficial. Not having this creates more work. Please seriously consider this Xero.

I also agree with this, I find it a little odd that Xero cannot handle bills credit notes. Having the ability to convert it simply would save a lot of faffing about. I like the idea of Xero handling statements too.

Worse scenario is the credit is posted as an invoice and subsequently paid...

This is really important, clients are spending a lot of money on software that does not recognise a credit note emailed in. It makes for a frustrating and long winded process to remove and re-add these in.

I absolutely agree with this.
Even better would be if the extraction software recognised a credit note a created that at the outset.