Following changes to the front-end of Xero there is now a difference between that and the api when selecting a list of Customers.

Original Behaviour - shown on the API:
All contacts start off as neither customer nor supplier. Once an invoice, bill or credit note is raised the isSupplier or isCustomer field is updated accordingly. The contact retains this status.

New front-end behaviour:
We look to see if any invoices or bills have been raised and categorise the contact accordingly.

We have a client who has an Accounts Receivable Credit Note posted to it so appears as a Customer in the api but not in the front-end of Xero I've had to hard-code this as an exception in our data warehouse to avoid mis-reporting in our exception reports (which isn't ideal).