How to Correct or Cancel an Invoice in Xero – The Right Way

Mistakes on invoices are common – whether it's the wrong item, incorrect date, or simply a typo. If you're using Xero, it's important to know the best way to fix an error while keeping your accounting records clean and audit-ready.

Let’s walk through when it’s okay to edit, and when you should cancel and reissue using a credit note instead. We'll also explain why deleting invoices isn't a good idea.

When It’s Okay to Edit an Invoice

If you notice a small error (like a spelling mistake or wrong reference number), and the invoice hasn’t been sent to the client yet, you can simply edit the invoice directly in Xero.

Best for:

• Typos in descriptions or customer details

• Minor date adjustments

• Price corrections before the invoice is emailed or approved

Not recommended if:

• The invoice has already been sent to the client

• You've recorded payment on the invoice

• It has tax or reporting implications

How to Edit an Invoice in Xero:

1. Go to Business > Invoices

2. Find the invoice you want to change (use the Draft or Awaiting Approval tabs)

3. Click on the invoice to open it

4. Select “Edit”

5. Make your changes – customer name, items, prices, dates, etc.

6. Click “Save” or “Approve”, depending on the status

Note: If you’ve already sent the invoice and notice a mistake, avoid editing it directly. It’s better to cancel and reissue it using a credit note to ensure proper recordkeeping.

Why You Shouldn’t Just Delete an Invoice

Xero allows you to delete draft or unpaid invoices, but that’s not a best practice once an invoice has been issued.

Reasons to avoid deleting:

• No audit trail – Deleting removes all evidence of the original invoice

• Compliance risk – Tax authorities often require records of all issued invoices

• Skewed reports – Removing invoices can distort financial reporting and history

  
  

The Right Way: Cancel and Reissue with a Credit Note

If the invoice has already been sent or approved, and you need to correct more than a minor detail, follow these steps to maintain proper records:

1. Open the Original Invoice

Locate the invoice in Xero that needs to be cancelled.

2. Create a Credit Note

From the invoice screen, select “Create and apply credit”. (three dots top right corner)

• This reverses the original invoice while keeping a proper record.

• The credit note should mirror the original invoice to offset it correctly.

• Add into the description a note why the invoice needed to be credited.

3. Apply the Credit Note

Apply the credit note to the original invoice. This neutralises the amount and marks the invoice as reversed.

Make sure to code the credit note back to the same sales account used in the original invoice. This ensures your financial reporting remains accurate.

4. Reissue a New Invoice

Now create a new invoice as usual, with the corrected information.

Go to Business > Invoices > New Invoice, fill it out, and send it to the client.

Summary: Best Practice in Xero

Scenario	Recommended Action
Small error, invoice not sent	Edit the invoice directly
Larger error, or invoice sent	Credit note + Reissue invoice
Invoice created in error	Credit note, not delete

Final Thoughts

Whether you're correcting a small typo or replacing a sent invoice with a new one, following best practices in Xero helps maintain clear, compliant financial records. Editing is fine for minor changes, but for anything more significant—or if the invoice has already been issued—using a credit note and reissuing is the correct approach.

Avoid deleting issued invoices. Use a credit note instead.