Problems
Clearing account will not clear in Xero
A clearing account stops returning to zero when something was posted into it that no deposit will cover, or a deposit covered something that was posted elsewhere. Six residues account for most of it: rejections, short pays, netted fees, same day cancellations, refunds, and payments dated on the wrong day. No bank feed reaches the account, so work it from the Account Transactions report.
Key facts
- What Xero offers for the account
- No feed to reconcile against. Xero's own response on its product forum says it has no plans to build a reconciliation screen for clearing, control and non bank accounts.1
- How much demand there is behind that
- 171 votes on the product idea, answered by Xero in September 2022 and still open1
- What a debit balance is
- Payments the practice system pushed in and the bank has not yet delivered. The practice system posts debits into the account.2
- How many accounts a practice works
- One per settlement rail, ten of them in the allied health canonical template, rather than one per funding source6
- Tax type on the account itself
- BAS excluded on every clearing account in the canonical templates6
- The cancellation window that catches people
- A HICAPS transaction can be cancelled only on the day it was processed, so the practice system payment has to go the same day4
- What archiving an invoice does
- Any payments attached to the invoice are archived with it in the practice system, leaving the Xero side untouched3
What a leftover balance actually is
A funder clearing account holds money the practice has been told it will get but the bank has not delivered yet. The practice system posts a payment against the invoice into the clearing account on the date the funder approved or paid the claim. When the lump sum lands, the bank line is matched against the same account and the balance drops back to nil. Cliniko describes its half of that plainly: when it pushes payments into your clearing account, it is creating debits.
So the balance is a claim about the near future. A debit balance says the practice system believes money is coming. A credit balance says the bank delivered more than the practice system has accounted for. Either way the account is not broken, it is telling you something, and the useful question is which of the two sides is stale.
Why Xero gives you nothing to work it with
The reason this feels harder than it should is structural rather than personal. Xero reconciles bank accounts against a bank feed. Set up as a current asset, which is what the practice system guides describe, a clearing account has no reconcile tab at all. Set up as a bank type account, which is what the canonical templates do, it has the tab and no feed delivers anything into it. Either way there is no tick box view where matched items disappear and the rest stand out.
That is Xero's own position, not an inference. The product idea asking for it carries 171 votes, and Xero answered it in September 2022 to say it has no plans to develop the ability in the near future, pointing readers at the Account Transactions report and at the app store instead.
Clearing accounts not coming back to "0", throwing out your Balance Sheet figures.5
So the Account Transactions report is the working surface. Sort it by date, start at the oldest entry, and check each one against the funder's remittance. Anything older than that funder's usual lag is the residue you are looking for.
Read the sign before you read the ledger
Two different problems produce a non zero balance, and they need opposite fixes, so the sign is worth reading first.
- A debit balance means the practice system posted payments the bank has not covered. Look for claims that were declined, cancelled, refunded or paid short, and for payments dated later than the deposit that carried them.
- A credit balance means a bank line was coded to the account with no payments underneath it. Look for a deposit reconciled before the practice system synced, a deposit coded to the wrong rail, or a batch matched twice.
- A balance that flips sign around month end is usually neither: the ordinary lag between the funder paying and the bank delivering, which clears in the first days of the next month.
The six residues, and the rail each one comes from
Each of the six has a home in the canonical template already. A declined Medicare or DVA claim and a HICAPS cancellation on the day are modelled with no account code and no tax type, which is the template saying the payment should not be there at all. A refund has no account code either, and keeps the original line's tax type.
| The residue | Rail it comes from | The entry that clears it |
|---|---|---|
| A whole claim declined after the payment was posted | Medicare, DVA | Remove the payment and leave the invoice open with a note |
| A claim line paid short of the invoiced amount | NDIA, plan managers, WorkCover | Post the amount paid, then credit the gap to the funder shortfall account or leave it outstanding against the patient |
| A fee taken out before the payout landed | Stripe | Split the bank line: the gross to the clearing account, the fee to merchant and claiming fees |
| A claim cancelled on the terminal the same day | HICAPS | Delete the practice system payment on the day of the cancellation |
| A refund, a voided invoice or an archived invoice in the practice system | Any rail | Raise a credit note on the original line and a credit note refund out of the same account |
| A payment dated on the bank date rather than the funder's paid date | Any rail that sends a remittance | Re-date the payment to the funder's paid date so it falls inside the batch that carried it |
The same accounts, before and after
Money that was posted and then taken back
The first group of residues is money the practice system was right about at the time and wrong about later. Medicare and DVA decline a claim as a whole rather than trimming a line, so a declined claim leaves a full payment sitting in the account with no deposit behind it. The canonical template models this as a component with no account code at all: the payment is not posted, or it is removed and the invoice reopened rather than written off.
A HICAPS claim cancelled on the terminal reverses the benefit before settlement, and the terminal guide is strict about the window: a transaction can be cancelled only on the day it was processed. Delete the practice system payment the same day and nothing reaches the clearing account. Miss it, and the residue stays until someone finds it.
Refunds and archived invoices behave the same way from the Xero side. Archiving an invoice in the practice system archives the payments attached to it, and Xero is not told. The correcting entry is a credit note on the original line plus a credit note refund out of the same account, because Xero has no negative payment object to mirror what the practice system did.
Money that was not coming in full
The second group is money the practice invoiced and the funder was not going to pay in full. It looks identical in the ledger and needs a different entry.
- A short pay. The NDIA pays at the price limit, WorkCover at the gazetted rate, a plan manager at the participant's remaining budget. Post what was paid, then decide once, per funder, whether the gap is credited to a funder shortfall account or left outstanding against the patient.
- A netted fee. A Stripe payout arrives after the fee has come out, so the deposit is smaller than the payments behind it. Split the bank line rather than forcing a match: the gross against the clearing account and the fee to merchant and claiming fees, which is where the GST on the fee belongs.
- A reversal in a later remittance. The NDIA claws money back as negative rows in a later run, netted against that run's total. Post the reversal as a credit note against the original invoice so the later deposit still equals the lines behind it.
When the amount is right and the date is wrong
The most frustrating residue is the one where every number is correct. A payment dated the day the bank line appeared, rather than the day the funder paid, sits outside the batch that carried it. The batch is then short by that amount and the following batch is long by it, and both look like errors.
This is why the pattern dates the payment on the funder's paid date from the remittance and writes the payment run number, payment request number or lodgement reference into the payment reference field. The reference is what groups the entries back into the batch the deposit paid.
Two legs, and which one the BAS sees
One deposit produces two legs, and conflating them is how a correcting entry ends up on the wrong tax rate. The clearing leg is BAS excluded on every clearing account in the canonical templates, because the revenue was recognised when the invoice was raised and the settlement is a movement of money rather than a new supply.
The revenue leg is the one that carries a tax treatment. For a listed health service delivered as appropriate treatment, that leg is GST free, and for a taxable item it is not. When you correct a residue, the correcting entry inherits the tax type of the leg it is correcting: a credit note on a short pay follows the original invoice line, and a fee split follows the expense account.
Keeping it at nil next month
Clearing the account once is a morning's work. Keeping it clear is a standing report and one decision per funder.
- An ageing report on the account, listing entries older than that funder's usual lag. The thresholds are a practice setting rather than a published standard, so pick them from your own feed and revise them.
- A month end balance by rail, with an owner. A rejection queue that nobody owns becomes next quarter's residue.
- One account per settlement rail, not per funding source. The rail is what produces a bank line, so it is what the balance has to reconcile against, and the funding source stays on the revenue lines where the reporting needs it.
- A written choice per funder on short pays: credited to the shortfall account, or left outstanding. Made once, it stops being a judgement call at month end.
If you are setting the accounts up rather than unpicking them, set up a clearing account covers the chart of accounts side and reconcile a clearing account covers the monthly routine.
What Ledger Map does with it
Ledger Map posts one balanced document set per deposit and leaves one exact match in the bank feed. The payments go in on the funder's paid date with the run reference on them, the fee leg and the shortfall leg are posted as their own lines rather than buried in a difference, and a deposit that does not balance becomes a question with the candidate postings shown instead of a silent posting.
Nothing above is a treatment Ledger Map picked. The accounts and the tax types come from the canonical template the practice starts from, and the practice approves its map before an invoice syncs. The residue is surfaced as an exception with a cause attached, rather than found in a balance sheet three months later.
Questions
Why will my Xero clearing account not go back to zero?
Because something in it has no matching bank line, or a bank line has nothing under it. The usual causes are a declined claim whose payment was left posted, a claim paid short of the invoice, a fee taken out before the payout, a same day cancellation, a refund or archived invoice that did not sync, and a payment dated on the bank date rather than the funder's paid date.
Can you reconcile a clearing account in Xero?
Not with the reconcile screen. Xero's response on its own product forum, dated September 2022, says it has no plans to build reconciliation for clearing, control and non bank accounts in the near future, and points at the Account Transactions report instead. Work that report oldest entry first against the funder's remittance.
Should I journal the leftover balance out to zero?
A journal makes the balance sheet look right and removes the evidence of what went wrong. Each residue has a cause and an owner: a declined claim to resubmit, a shortfall to credit or chase, a fee to split, a cancellation to delete. Clearing it by cause keeps the audit trail and stops the same residue arriving next month.
What does a credit balance in a clearing account mean?
A deposit was coded to the account with no payments sitting under it. Look for a bank line reconciled before the practice system synced, a deposit coded to the wrong settlement rail, or one batch matched twice. The fix is on the bank side of the account rather than the practice system side.
What is the difference between a suspense account and a clearing account?
A clearing account holds money on its way between two known points, so every entry in it has a deposit coming that will cover it. A suspense account holds entries nobody has classified yet. Moving a stuck clearing balance into suspense renames the problem rather than solving it, because the entry still has a cause and an owner behind it.
How old does a clearing balance have to be before it is a problem?
Older than the funder's usual lag between paying and the money landing. Those lags are working conventions rather than published service standards, so set the threshold from your own bank feed, review it, and treat anything past it as an item somebody owns rather than as noise.
Read next
- Xero how toHow to reconcile a clearing account in Xero
- Xero how toSet up a clearing account in Xero
- ProblemsMedicare deposit is less than the claims sent
- ProblemsThe NDIA paid less than I invoiced
- ProblemsStripe payout does not match the invoices
- FundersHow Medicare bulk bill payments land in Xero
- HubProblems
Sources
Open questions
- Xero's September 2022 response is the most recent statement from Xero found on reconciling non bank accounts. Comments on the same thread through 2024 and 2026 say the gap is still there, but no newer statement from Xero was found.
- Whether an aged residue should be written off, and at what age, is a practice and BAS agent decision. This page states the ageing report and leaves the threshold to the practice.
- The per funder lag figures in the corpus are working conventions rather than published service standards, so they are stated as thresholds a practice sets rather than as facts about the funders.
- Reconciliation, ability to reconcile clearing, control and non-bank accounts in Xero
Xero Product Ideas. Retrieved 3 Sep 2026. Source updated 14 Sep 2022.
secondary
- Reconcile in Xero when using the Cliniko integration
Cliniko. Retrieved 3 Sep 2026. Source updated 28 Jul 2026.
primary
Review
Last reviewed 3 Sep 2026 by Shane
General information for Australian allied health practices, not tax advice. Confirm a treatment with your BAS agent or accountant before you post it.
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