What's changing
We've updated how Square settlements are broken down when they're posted to Xero. Previously, some types of payment (like cash) were stripped out and never reached Xero, and gift cards weren't tracked as a liability. With the new logic, every payment type ("tender") in a Square order gets its own clear line in your settlement, so your Xero books match what actually happened at the till.
Payment type | Old behaviour | New behaviour |
Card, digital wallet, buy-now-pay-later, bank transfer | Posted via the card deposit | No change — still posted via the card deposit |
Cash | Stripped out — never posted to Xero | Posted to a new Cash on hand line (a current asset / till account) |
Gift card | Offset to zero, no liability tracking | Tracked with a Gift Card Liability account — a sale credits the liability, and a redemption debits it |
Uber Eats, DoorDash, other non-Square channels | Posted as revenue | No change |
Revenue (goods) | Could occasionally be counted twice | Counted once per order |
How it works
Each order's revenue is booked once, and every payment type in that order gets its own line inside your existing settlement for that channel and location. You'll still see one Xero entry per platform and location — we're not creating a separate entry for every payment type, since that would multiply the number of entries in your books.
Example: a split-tender order
Say a customer pays for a $16.33 order with $6.33 on card and $10.00 in cash:
The settlement shows the $16.33 sale, minus $6.33 (cleared separately by the card deposit) and minus $10.00 to Cash on hand.
The $6.33 lands in your bank via the card deposit, and the $10.00 now shows up in Cash on hand instead of disappearing.
Example: a gift card
Selling a gift card credits the Gift Card Liability account — you've received the cash, but haven't earned the revenue yet.
Redeeming it later debits the liability and recognises the revenue at that point.
Over the life of the gift card, the liability nets to zero. Unredeemed ("breakage") balances aren't handled automatically yet — your accountant can account for these with a manual journal if needed.
Do I need to do anything?
It depends on your account:
New Square connections — the new logic applies automatically. No action needed.
Existing accounts that haven't posted a Square settlement to Xero yet — the new logic will apply the next time you generate and post your settlements. No action needed.
Existing accounts that have already posted Square settlements to Xero — nothing changes unless you opt in. See below.
Opting in (existing accounts that have already posted)
If you'd like to switch to the new tender routing, a human agent on the Link My Books team can help you:
Turn on per-tender routing for your account.
Set an effective-from date — this must be the start of a payout period you haven't posted to Xero yet (see the important note below).
Confirm which Xero accounts you'd like to use for Cash on hand and Gift Card Liability.
Regenerate the relevant periods so you can review them in Link My Books before sending anything to Xero (nothing posts automatically).
⚠️ Important: avoid duplicate entries
Xero doesn't allow us to delete entries that have already been matched or reconciled. This means the switch is only safe for periods you haven't posted yet.
If your effective-from date is set to a period you've already posted under the old logic, you'll end up with duplicate entries in Xero — the old entries stay, and the new ones post on top of them.
If you use COGS (cost of goods sold) tracking, this also risks double-counting COGS for any back-dated period.
The rule of thumb: always opt in from the start of your next unposted period — never back-date it over periods you've already sent to Xero.
Questions?
If you're not sure whether a period has already been posted, or which date to use as your effective-from date, a human agent on the Link My Books team can help you check before making any changes.