Should a Xero clearing account be a current asset or a bank account?

Both hold the balance correctly, so the choice is about the documents you want later. Cliniko, SimpleClinic and ezyCollect all describe a current asset account that is BAS excluded and takes payments. The canonical Ledger Map templates use bank type accounts, because a netted fee posts as a spend money and a sweep is a transfer, and both of those want a bank type account at the far end.

How many clearing accounts does a clinic need?

One for each settlement rail the practice actually banks from. The allied health template models ten, covering Medicare, DVA, NDIA, plan managers, HICAPS, Tyro Health, EFTPOS, online card payments, WorkCover and insurers paying directly. A practice that runs three of those rails needs three accounts, not ten, and not one per funder.

What tax rate goes on a clearing account?

BAS excluded, in all three canonical templates. The account moves money that has already been earned and reported on the revenue line, so the second leg carries no consequence of its own on the BAS. The revenue line is where the tax rate for the service is decided.

Do I have to enable payments on the account?

On a current asset account, yes. The three vendor setup articles all have you tick it, because an account outside the bank accounts takes an invoice payment once payments are enabled on it. Without the tick the practice system's payment can fail to sync. A bank type account already accepts payments, so the setting does not apply to it.

Can one account cover every funder?

It can, and plenty of practices start there because their software offers one account by default. It holds the right total. What it costs is the ability to read the balance, since a single figure covering a payment run, a batch and a daily settlement cannot be checked against any one funder document.

Xero how to

Set up a clearing account in Xero

Add one clearing account per settlement rail rather than one per funder: Medicare, DVA, NDIA, plan manager, HICAPS, Tyro Health, EFTPOS, Stripe, WorkCover and insurer direct. Give each a code, set the tax rate to BAS excluded, and make it either a bank type account or a current asset account with payments enabled. Then point the practice system's payment types at them.

Key facts

Accounts to create: Ten, one for each settlement rail the allied health template models¹
Codes those accounts use: 100 to 109, sitting together in the asset class¹
Tax rate on each one: BAS excluded, unchanged across all three canonical templates¹
Type Cliniko's Xero setup sets: Current asset, BAS excluded, with the box to enable payments to this account ticked²
Type the canonical templates set: Bank, so a netted fee and a sweep both have an account to sit against¹
Xero's answer on reconciling it: No plans to develop reconciliation for clearing, control and non bank accounts, September 2022⁶
The name Zanda points at: Payments Clearing, described as the account often used for exported payments⁴
What picks the account: The rail that produces the bank line, while the funder stays on the revenue line¹

What the account holds

A clearing account is a holding account between two dates. The first is the day a funder approves or pays a claim, which is when the invoice should close so aged receivables are honest. The second is the day the money reaches the bank, which is when a bank line appears and has to be matched. Without an account in between, one of those two dates has to be wrong.

So the balance means one thing from the day it is created: claims a funder has approved and not yet banked. That is the test to hold the setup to.

One account per settlement rail, not one per funder

The account is chosen by whatever produces a bank line. That is the rail, not the funder. Funding source belongs on the revenue line, where it drives the account code and the tax rate and where reporting by funder already reads it. Splitting the holding accounts by funder as well duplicates a distinction the revenue side already carries, and leaves a chart of accounts nobody wants to open.

The allied health template models ten rails and gives each one an account. Codes 100 to 109 sit together in the asset class so they read as one block on a trial balance.

The ten accounts the allied health template creates¹

Code	Account	What lands in it
100	Medicare clearing	Claims Services Australia has approved, until the payment run is banked
101	DVA clearing	DVA claims, kept apart because DVA pays in its own payment runs
102	NDIA clearing	One EFT per NDIA payment batch, until it is matched to the bank line
103	Plan manager clearing	Every plan manager, unless one payer's volume earns its own account
104	HICAPS clearing	The health fund benefit HICAPS settles, paid the day after the terminal settles
105	Tyro Health clearing	Each funder Tyro Health settles, so every expected settlement stays visible
106	EFTPOS clearing	A terminal card settlement not routed through Tyro or HICAPS
107	Online payments clearing (Stripe)	Gross card takings, until the payout, fees, refunds and disputes are split
108	WorkCover clearing	Invoices a claim owner has authorised, until the nightly EFT arrives
109	Insurer clearing (TAC, CTP, icare direct)	Insurers paying directly rather than through a claiming rail

Take out the rails the practice does not use. A clinic with no terminal needs neither the EFTPOS nor the HICAPS account, and a psychology practice billing Medicare and private cards may only need three. The list is a starting shape, not a set to copy whole.

Bank type or current asset

The vendor help articles land in the same place. Cliniko has you select Current Asset as the account type, BAS Excluded as the tax, and tick the box to enable payments to this account. SimpleClinic describes its settlement account as a current asset account that was BAS excluded and able to take payments. ezyCollect walks through the same three settings for its own write back. Zanda names no type: it points its export at a payments account and says a Payments Clearing account is often used.

The canonical Ledger Map templates go the other way and use bank type accounts in v1. The reason is the two documents a real month produces. A rail that nets its fee needs a spend money for the fee, and a sweep to the operating account is a bank transfer. Both of those want a bank type account at the far end. Current asset accounts are held as a later option, once a document set for them has been tested against live deposits.

A bank type account appears in the bank accounts list and in transfers, which is what makes the sweep and the fee posting straightforward.
A current asset account keeps the bank accounts list to the accounts that are really banks, which several practices prefer on sight.
A current asset account takes an invoice payment only when payments are enabled on it, so that tick is not optional.
Either type holds the same balance and reports it in the same place. What changes is the shape of the month end document.

The constraint behind the choice

One thing about the account is worth knowing before you create it. Xero's reconcile screen belongs to bank accounts, and the request to extend it to clearing, control and non bank accounts has 171 votes behind it. Xero answered in September 2022 that it has no plans to develop the ability in the near future, and pointed at the Account Transaction Report instead. That is still the answer standing on the thread.

This feature is critical. Reconciling via extracted files just isn't viable ... This feature has been available in MYOB for a long time.⁶

That is not a reason to skip the account. It is the reason to keep the number of them small and the naming obvious, because what replaces the screen is a person reading a report per account.

Adding the account in Xero

The work is in the chart of accounts, and it is the same handful of fields whichever type you land on.

Open the chart of accounts and add an account for the first rail the practice banks from.
Set the type: a bank type account, or a current asset account if you have chosen that shape.
Give it a code from one unused block, so the holding accounts read together on a trial balance.
Name it for the rail rather than the funder, for example Tyro Health clearing rather than icare clearing.
Set the tax rate to BAS excluded.
Tick enable payments to this account where the account is a current asset, so an invoice payment can be taken to it.
Repeat for each rail, then stop. Rails the practice does not bank from do not need an account waiting for them.

A bank type account asks for an account name and number of its own. Practices usually give it something recognisable rather than a real BSB, since no feed is coming to it.

Codes and names that survive a year

Two small choices decide whether anyone can use these accounts in six months. The first is the code block. Keeping the holding accounts adjacent means a trial balance shows them as one run, rather than burying an odd balance between a bank account and a term deposit.

The second is the name. It should say which document explains the balance. Medicare clearing points at a payment run. NDIA clearing points at a batch. Tyro Health clearing points at a daily settlement per funder, which is why one account keeps every expected settlement visible. Read Tyro Health and HICAPS for what each of those documents contains.

Point the practice system's payment types at it

An account with nothing pointed at it stays empty, and this is the step that gets half done. In the practice system, each payment type carries its own Xero account. Cliniko documents connecting specific payment types to specific clearing accounts, which is the vendor's own version of the per rail rule. Zanda takes one payments account for the whole export by default, so a practice there has to decide whether it splits payment types or accepts one holding account.

List the payment types the practice actually uses, then map each one to the rail that banks it rather than to the funder that owes it.
Watch what a bulk claim payment type does, because that is the one that usually stays on the default account.
Check a card payment type separately from a terminal payment type, since those two settle on different rails.

The system pages carry what each product can and cannot map: Cliniko and Zanda are the two with the most documented behaviour here.

Where the money sits between two dates

Plate 1One rail, four hops, and the two dates the account exists to hold apart.

The account earns its place at the second and fourth hops. Without it, the invoice either closes on a date the bank cannot confirm, or stays open until a deposit arrives that covers dozens of them at once.

Check the setup worked

Wait for the first real deposit on each rail rather than testing with a made up payment. Four checks tell you whether the shape holds.

What to check after the first deposit on each rail¹²

Check	What good looks like	What it means if it fails
The payment landed in the account you expected	The rail's own account, not a default	A payment type in the practice system is still pointed at the old account
The bank line matches one move out	One entry for the whole deposit	The payments were posted to the bank account directly, so the account never held anything
The tax rate on the holding side	BAS excluded, picked up from the account	The account was created with a default rate and needs editing before the next run
The balance after everything is matched	Only claims the funder has approved and not yet banked	Something else is being held there, which is what the month end review is for

From there the account has a routine rather than a setup. Reconcile a clearing account covers the month end pass, and batch deposit for a remittance covers the alternative where a deposit equals the invoices behind it exactly. A bank rule can code the recurring line once the shape settles.

What Ledger Map does with it

Ledger Map starts from a template like the one above, shows the practice the accounts it would create and the rails they answer to, and waits for approval before anything is written. The codes and the tax rate come from the canonical template rather than a setup wizard, so two practices on one template get the same shape.

After that the map is standing. For each deposit it posts one balanced document set: the payments into the rail's account on the funder's paid date, the fee leg where the rail took one, and the move out for the deposit total. That leaves one exact match waiting in the bank feed. Anything the map cannot resolve becomes a question with the options laid out, not a silent posting.

Questions

Should a Xero clearing account be a current asset or a bank account?
Both hold the balance correctly, so the choice is about the documents you want later. Cliniko, SimpleClinic and ezyCollect all describe a current asset account that is BAS excluded and takes payments. The canonical Ledger Map templates use bank type accounts, because a netted fee posts as a spend money and a sweep is a transfer, and both of those want a bank type account at the far end.
How many clearing accounts does a clinic need?
One for each settlement rail the practice actually banks from. The allied health template models ten, covering Medicare, DVA, NDIA, plan managers, HICAPS, Tyro Health, EFTPOS, online card payments, WorkCover and insurers paying directly. A practice that runs three of those rails needs three accounts, not ten, and not one per funder.
What tax rate goes on a clearing account?
BAS excluded, in all three canonical templates. The account moves money that has already been earned and reported on the revenue line, so the second leg carries no consequence of its own on the BAS. The revenue line is where the tax rate for the service is decided.
Do I have to enable payments on the account?
On a current asset account, yes. The three vendor setup articles all have you tick it, because an account outside the bank accounts takes an invoice payment once payments are enabled on it. Without the tick the practice system's payment can fail to sync. A bank type account already accepts payments, so the setting does not apply to it.
Can one account cover every funder?
It can, and plenty of practices start there because their software offers one account by default. It holds the right total. What it costs is the ability to read the balance, since a single figure covering a payment run, a batch and a daily settlement cannot be checked against any one funder document.

Sources

Open questions

The exact Xero Central click path and the current field labels could not be verified, because Xero Central and the Xero developer documentation both refuse an automated fetch. The screens here are named in general terms rather than quoted, and what enabling payments on an account does is taken from the vendor setup articles rather than from Xero's own documentation.
Whether a bank type clearing account behaves differently in Xero's own screens once no feed delivers lines to it could not be confirmed from a Xero source that would load.
The canonical templates hold bank type accounts in v1 and name current asset accounts a later option once a document set for them has been tested on live deposits. Until that testing happens, the template's constraint is stated as the template's own rather than as a general rule.
Whether HICAPS settles one deposit per day across all funds or one per fund is flagged as unconfirmed in the template's own BAS agent note, so this page does not say how many HICAPS accounts a practice will end up with.
No ranking check was run for the target query on the day this page was written, so the description of the current answer landscape in the brief rests on reading the vendor pages rather than on a fresh search.

Allied health by funding source, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary
Set up Xero for use with Cliniko
Cliniko. Retrieved 3 Sep 2026.
primary
Reconciling in Xero using a settlement account
SimpleClinic. Retrieved 3 Sep 2026. Source updated 6 Jan 2021.
secondary
Exporting to Xero
Zanda. Retrieved 3 Sep 2026.
primary
Clearing account and payment reconciliation with Xero
ezyCollect. Retrieved 3 Sep 2026. Source updated 17 May 2024.
secondary
Reconciliation: ability to reconcile clearing, control and non bank accounts
Xero product ideas. Retrieved 3 Sep 2026. Source updated 14 Sep 2022.
secondary

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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