Xero how to
Cash vs accrual GST for a clinic in Xero
Your GST basis sets which date a sale counts on. On accruals Xero reports a sale in the quarter the invoice is dated. On cash it reports the sale in the quarter the payment is dated. For a clinic the funder pays weeks after the appointment, so a claim invoiced in June and paid in July falls in different quarters on the two bases. Check the setting in Xero.
Key facts
- What an accruals basis keys on
- The invoice date, so a sale is recorded when the invoice is sent2
- What a cash basis keys on
- The payment date, so a sale is recorded when the customer pays2
- Where the two split for a clinic
- The funder lag: a bulk bill claim paid two to three working days after lodgement can settle in the next quarter7
- Typical Medicare bulk bill lag
- Processed inside two business days where no manual assessment is needed, with payment in two to three working days7
- Why one claim carries one date
- One rejected service item marks the whole invoice declined, so a claim settles on a single payment date rather than in parts6
- Treatment revenue on both bases
- GST free where the ATO's three health service conditions are met, so the basis moves the quarter rather than the GST4
- Clearing accounts in the canonical template
- One per settlement rail, codes 100 to 109, every one of them BAS excluded12
- The date the canonical pattern uses
- The funder's paid date from the remittance, not the date the bank line appeared12
Which date each basis uses
The GST basis decides one thing: which date a sale counts on. On an accruals basis Xero includes a sale in the activity statement for the period the invoice is dated. On a cash basis it includes the sale in the period the payment is dated. Xero calls the setting the GST accounting method, and it sits in your financial settings alongside the financial year end and the lock dates.
For a shop the two dates are usually the same day. For a clinic they are not. The appointment is invoiced on the day it happens, the claim goes to a funder, and the money arrives days or weeks later. So a run of invoices raised in the last fortnight of a quarter is very often paid inside the following one.
The funder lag is what makes the choice bite
How often a claim crosses a quarter boundary depends on the funder, because each one pays on its own schedule. The lag is the distance between the date the invoice carries and the date the payment carries, and it is what the difference between the two bases comes down to.
| Funder | Typical lag | What sets the payment date |
|---|---|---|
| Medicare bulk bill | Processed inside two business days, payment in two to three working days | The bulk bill payment report, which lists the claims that were paid |
| NDIS agency managed | Two to three business days from submission, up to ten days for a complex claim | The date the NDIS finishes processing the claim |
| NDIS plan managed | No standard schedule; terms of fourteen, thirty or forty five days from the invoice date are common | The plan manager's own payment terms |
| WorkCover Queensland | Disbursed each night once the invoice is approved; the approval time is not published | The claim owner approving the invoice in Provider Connect |
A practice billing mostly private card work barely notices the setting. A practice billing mostly Medicare bulk bill or plan managed NDIS work sees a slice of every quarter land on the other side of the line.
One claim, two quarters
Here is the case worked. A psychologist sees a bulk billed patient on the last Wednesday of June. The invoice is dated that day. The claim is lodged the same night, processed inside two business days, and paid in the run that lands in the first week of July.
Same claim, same money, two different quarters. On accruals it belongs to the June quarter. On cash it belongs to the September quarter. Neither is wrong. They are answers to different questions, and your organisation has already chosen one of them.
What actually changes on the activity statement
This is the part the generic answers skip. Most allied health revenue is GST free, so moving it between quarters does not move any GST. What moves is the reported sales figures, and the timing of the taxable minority.
| Line on the invoice | On an accruals basis | On a cash basis |
|---|---|---|
| Clinical treatment, GST free | Reported at G1 total sales in the quarter of the invoice, no GST either way | Reported at G1 total sales in the quarter of the payment, no GST either way |
| A report written for an insurer, taxable | GST payable at 1A in the quarter of the invoice | GST payable at 1A in the quarter the funder paid |
| A product sold at the desk, taxable | Same quarter on both bases, because the patient paid at the desk | Same quarter on both bases, because the patient paid at the desk |
So the practical effect for a clinic is smaller than the generic articles imply on the GST line, and larger than they imply on the sales lines. G1 total sales is what the turnover tests and the audit ratios are read off, so a quarter of GST free receipts landing late still changes the picture an accountant sees.
On a cash basis, the payment date you type is the one that counts
A cash basis makes a date a bookkeeper types into a real decision. The canonical allied health template posts each paid claim into the settlement rail's clearing account, dated on the funder's paid date from the remittance, and then matches the bank line as a transfer. Every clearing account in that template is BAS excluded, so no clearing movement reports on the activity statement.
That matters because the receipt against the invoice is what a cash basis picks up, not the bank line. Date the receipts on the day the bank credit appeared and a claim paid on the last day of June can drift into July. Date them on the funder's paid date and the quarter is the funder's, which is the one the remittance can prove.
The org's GST basis (cash or accruals), read from Xero, changes when a part-payment's GST is attributed and must be shown on this card12
How to check your own organisation
Five minutes of checking beats an assumption, particularly if the file was set up by somebody else or migrated from another ledger.
- Open the Accounting menu, then Accounting settings, then Financial settings, and read the GST accounting method. It says cash or accruals in plain words.
- Run the Activity Statement report for the last lodged quarter and check the basis printed in the header matches.
- Open the funder's clearing account and read the dates on the receipts sitting in it. On a cash basis those dates set the quarter.
- Run the GST Reconciliation report and read the timing difference line, which is Xero's own account of the gap between the two bases.
- Set a lock date once the statement is lodged, so a late edit in the practice system cannot reach back into a lodged quarter. See lock dates and sync.
The same problem at year end
The quarter boundary version of this is quarterly. The financial year version of it is annual, and it catches more people. A June invoice paid in July sits in different years on the two bases, so the profit and loss an accountant runs on accruals and the receipts a practitioner is paid on can disagree by a fortnight of claims.
What the basis does not change
The basis is a timing rule. It does not change whether a supply is taxable. A psychology session that is GST free stays GST free on both bases, and a report written for a third party stays taxable on both. The tax rate on each line comes from what the service is and who provides it, not from when the money moved and not from who paid.
It also does not change the account. The revenue row a line lands on is set by the funding source and the service category in the practice's approved map, and the basis is read from Xero rather than chosen alongside it.
What Ledger Map does with it
Ledger Map reads the organisation's GST basis from Xero and shows it on the card where a treatment is approved, because the same receipt can attribute GST in a different quarter depending on it. It does not set the basis and it does not change it.
For each funder deposit it posts one balanced document set: the paid claims receipted into the rail's clearing account on the funder's paid date, and the fee leg where the rail takes one. That leaves one exact match against the bank line in the feed, and it leaves the payment dates a cash basis reads sitting on the remittance rather than on the bank statement. Anything the map cannot resolve becomes a question with the options laid out. See how it works and reconciling a BAS payment or refund.
Questions
Does a clinic have to report GST on a cash basis?
No. It is an election, and eligibility depends on turnover. Read the setting in your Xero financial settings to see which basis the organisation is on now, and take the eligibility question to your BAS agent or accountant rather than to a blog, because the published turnover thresholds are stated inconsistently by secondary sources.
If most of my revenue is GST free, does the basis matter at all?
Yes, but not on the GST line. GST free treatment revenue carries no GST on either basis. The basis decides which quarter that revenue appears at G1 total sales, and it decides which quarter the taxable minority, such as insurer reports and retail products, is reported and paid in.
Which date should a funder payment carry in Xero?
The date the funder paid it, taken from the remittance or the payment report, rather than the date the bank line appeared. That keeps the invoice closing on the date the funder settled it, and on a cash basis it puts the sale in the quarter the remittance can prove.
What does the timing difference line on the GST Reconciliation report mean?
It is a GST figure rather than a sales figure, and the report's own wording was not read for this page, so check the heading on the line in your own file. On a cash basis it carries the GST sitting on taxable invoices raised but not yet paid, or paid but not yet invoiced, at the date the report is run. Clinical revenue that is GST free contributes nothing to it, so for most practices a claim lodged and not yet settled leaves the line alone and the funder lag shows up in the G1 comparison between periods instead.
A June invoice was paid in July. Which year does it belong to?
Both, depending on which report you are reading. Accrual reports and an accruals basis activity statement put it in the year of the invoice. Cash reports, a cash basis activity statement and a payout on receipts put it in the year of the payment. Store both dates so each report can use the one it needs.
Read next
- FundersHow Medicare bulk bill payments land in Xero
- FundersPlan-managed NDIS payments in Xero
- Xero how toReconcile a BAS refund in Xero
- Xero how toXero lock dates and a practice software export that will not land
- Practice systemsCliniko Xero integration: what syncs, what does not
- Practice systemscoreplus Xero sync: one account for all revenue
- HubXero how to
Sources
Open questions
- The turnover threshold for electing a cash basis could not be verified from the ATO directly: the page refused the fetch on 3 Sep 2026, and the Xero guide that was readable gives two different figures in the same document, an aggregated turnover under ten million and a GST turnover of two million or less. No threshold is printed here.
- The Xero Central article on how GST works in Xero renders through JavaScript and returned an empty document to the fetcher on 3 Sep 2026. Its wording is carried here from the research read that quoted it, which is why it is marked unverified and why no key fact rests on it.
- How long the bulk bill payment report takes to appear is stated two ways. Services Australia says one business day after processing, which is the figure drawn here, and the vendor summary of Medicare billing that supplies the processing and payment timings puts it at 48 to 72 hours.
- The WorkCover Queensland authorisation window could not be verified. The insurer's Provider Connect page states no timeframe, so the table says only that payment is disbursed nightly once the invoice is approved.
- How long a plan manager takes to pay is not published as a standard. The billing guide read for this page gives common terms of fourteen, thirty or forty five days from the invoice date rather than a typical elapsed time, so no typical figure is printed.
- The canonical template's treatment of a package or session block paid in advance is not yet proven against either basis in a paid Xero test organisation, and carries a BAS agent note saying so. This page does not resolve it.
- The live top five results and the current AI answer for this query were not measured for this draft, so the differentiator rests on the historical shape of the answers rather than on today's results.
- Medicare digital claiming: payment and processing reports, MDCM07INFO2
Services Australia. Retrieved 29 Aug 2026. Source updated Jul 2024.
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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