Processing Recipient Created Tax Invoices (RCTI)

Normally, tax invoices are issued by you (the supplier). However, the purchaser/recipient can, in some cases, generate a tax invoice on the behalf of the supplier. This is known as a recipient-created-tax-invoice (RCTI)

RCTI's are useful when suppliers are unreliable in sending invoices through or the amount to be invoiced is unclear at the time to a service being rendered.

There are restrictions around when an RCTI can be issued. You should familiarise yourself with these requirement. See here

XERO RCTI's

Your bookkeeper will create the RCTI's for you, from data supplied by you. They will then be sent through to you for approval and payment to the supplier.

Below are the steps required by you to approve and make payment on RCTI's generated on behalf of your suppliers:

Preparing RCTI data

How you prepare the RCTI data and send it through to your bookkeeper for processing, depends on your internal processes. However, normally, we would provide you with an RCTI template that you complete with the details and amounts to be included on the RCTI's for your suppliers.

Once you have entered the required data let your bookkeeper know that it is ready for processing and we will get the RCTI's prepared for you in Xero.

Your bookkeeper will prepare the RCTI's and send you an email when the draft RCTI's are ready for your approval.

Checking and approving the draft RCTI's

To review and approve the draft RCTI's do the following:

1. Go to the Awaiting Approval queue in the Purchase Orders screen in Xero or click on the link in the email from your bookkeeper.
2. Check the data in the following fields for each RCTI:
   1. Contact name
   2. Date (this is the date of the RCTI)
   3. Delivery Date (the is the date that payment is scheduled to be made to the supplier)
   4. Order Number - Make sure that there is an RCTI number included
   5. Theme - Check that the theme is Recipient Created Tax Invoice. This ensures that a correctly formatted RCTI is sent out to the supplier
   6. Line Items - Check that the Description and Unit Price have the correct details included
3. Make any adjustments that are required, or if you are unsure about the changes, contact your Bookkeeper
4. Once you are ready to approve the RCTI, click Approve
5. Move into the next RCTI to approve

Once all RCTI's have been approved send an email to your Bookkeeper letting them know that all RCTI's have been approved, or let them know of any changes that are required.

Your Bookkeeper will double-check the approved RCTI's and prepare bills for each supplier in Xero as well as a batch payment for you to use to make the required payments to your suppliers

Processing Batch Payment

Your Bookkeeper will double-check the approved RCTI's and prepare a batch payment for you to use to make the required payments to your suppliers

Once you receive an email from your Bookkeeper letting you know that the payments are ready to be processed, do the following:

1. Click on the batch payment link included in the email from your Bookkeeper
2. Click on the Export Batch File button to download the ABA file
3. Upload the ABA file to your online banking, or if you are unsure how to do this, follow these instructions.
4. Once the payment has been processed, send remittance advice to each Supplier. Here are instructions on how to do this, if you need help.

Next Steps

There is nothing more that you need to do. However, once the payments appear in your bank feed (usually the next business day), your Bookkeeper will reconcile the payments against the bills for each supplier.