Xero Clearing Account Requirement for Payouts

Clearing Account must be a Bank Account

When processing Shopify payouts via the Post to Xero app, the app creates a bank transfer from your Clearing Account to your Bank Account. Due to a limitation in Xero, transfers can't be created between a CURRENT  type account and a BANK  type account — they can only be made between two BANK  type accounts. A CURRENT  type asset account can't be used in a bank transfer.

So for reconciliation to work smoothly, your Clearing Account must be set up as a BANK  type account, even if it isn't connected to a real bank feed. This lets the app handle the transfer automatically for each payout.

Auto sync must be turned on

For the transfer between the Clearing Account and the Bank Account to be created automatically, Auto sync must be on. If your workflow relies on posting payouts manually with Auto sync off, you'll need to create the transfer yourself in Xero (see Manual workaround below).

Manual workaround: creating the transfer yourself

If your Clearing Account has to stay as type CURRENT , or if Auto sync needs to be off, you can recreate the transfer manually in Xero:

1. Creating a Spend Money transaction from the clearing account

   Guide: Add a Spend Money transaction in Xero

2. Then creating a Receive Money transaction in the bank account

   Guide: Add a Receive Money transaction in Xero

Make sure the amount and date match the actual payout so it reconciles correctly.