The Xero account used for a payment is the wrong type

The invoice posted, but the payment was turned away with a message saying the account it is linked to isn't a Bank or Current type account.

Xero only accepts payments into accounts it treats as holding money. An account set up as revenue, an expense or a liability can't receive one, however sensible it looks in your chart of accounts.

Which Account is Wrong

The message names three settings because a payment can touch any of them. Check them in this order, as the first is much the commonest:

1. The bank or clearing account set for the order's payment gateway, in Setup - Payouts.
2. Your Gift Cards Liability Account on Setup - Xero, if a gift card was used.
3. Your rounding account, also on Setup - Xero.

Open your chart of accounts in Xero and look at the type shown against each one. You are looking for the one that isn't a bank or current type.

How to Fix It

There are two ways round it, and which is better depends on how that account is used elsewhere in your books.

Either change the account's type in Xero, or leave it as it is and point the setting at a different account that is already the right type. If the account appears in reports or reconciliations you have set up, changing its type can have knock-on effects, so the second option is often the safer one.

Once that is sorted, go to Dashboard - Orders, find the order and click Post to Xero.

Payouts are Stricter

Worth knowing if you are on Shopify Payments. A payment will go into either a bank or a current type account, but the transfer the app creates for a payout will only go between two bank type accounts. A current type account is fine for the one and not the other.

So an account that works perfectly well for payments can still hold up your payouts. See Xero Clearing Account Requirement for Payouts.

Not sure which account is at fault? Email us at help@hyvelabs.co with your shop URL, the order number, and the message shown on the order.