What does Xero do with fully refunded invoices?

When an invoice is fully refunded in Xero, it is transferred to a Paid status. This reflects the completion of the transaction where the payment has been returned, indicating that no amount is outstanding. The Paid status helps users to easily track the financial status of invoices and ensures clarity in the accounts receivable. By marking the refunded invoice as Paid, Xero maintains an accurate financial record, showing that while the service or product was initially charged, the refund means there is no further obligation related to that invoice.

The other options do not accurately capture this process; for example, marking an invoice as Due or moving it to Awaiting Payment status would suggest that there is still an outstanding amount, which is not the case with a fully refunded invoice. Archiving them automatically would imply that the invoice is removed from active records, which is not aligned with the proper handling of refunds in accounting practices.