Set tracking defaults on repeating invoices, contacts, or bills to speed things up and reduce manual entry errors. With Tracking Categories, you can compare these in custom P&Ls with just a few clicks. Each business can set up two active Tracking Categories, and each category can contain up to 100 individual options.

Ask Yourself These Strategic Questions

With these insights, leadership teams can spot opportunities, address underperformance, and allocate resources to drive maximum ROI – all based on clear financial reporting. Using tracking categories allows you to gain insights into the performance of different segments of your Xero organization. They can be a very useful analysis tool for managers and business owners. Implementing tracking categories in Xero can seem daunting for businesses wanting more financial insights. Xero’s tracking dimensions are limited, and firms that need to monitor project + job + phase + location quickly run out of room.

Enhancing Workflow Efficiency with Automated Tracking Tools

• Overall, implementing tracking gives you the financial clarity and efficiency boost modern businesses need today.
• Common problems can arise when working with tracking categories in Xero.
• Referencing Xero Central can supplement internal teams in building out an effective tracking framework.
• Assign tracking categories consistently to enable dynamic reporting by category across your financial documents.

Their customer success team is also available to help you maximize the value of the platform. Similarly, item-level tracking may show an unexpected uptick in certain product demand. Operations leaders can re-allocate inventory, production capacity, and staff to match. By tapping into existing data from other systems, rich tracking can be added automatically without changing existing workflows.

Navigating to Xero Tracking Category Settings

For example, you could create tracking categories like « Department », « Location », how to use xero tracking categories or « Sales Campaign » and assign those values to invoices, bills, bank transactions etc. Tracking categories allow users to create customized labels that can be assigned to transactions within Xero. For example, a business might create tracking categories for individual projects, departments, locations, clients, or other segments. Adding customized tracking in Xero enables more detailed reporting on how money flows through your organization. You can break down income and expenses by tracking categories like customers, projects, departments, locations and more.

• It focuses specifically on tracking time and expenses for client projects with the aim of billing the client later.
• The key is having clear visibility to base decisions on through advanced tracking.
• Retail businesses with multiple storefronts—whether they’re boutiques, coffee shops, or bike shops—need to track the performance of each location individually.
• This allows flexibility in importing only the fields you need for financial analysis and reporting.
• To access the tracking category setup in Xero, first log into your Xero account and click on the « Settings » icon in the top right corner.

When first implementing tracking, focus on the Getting Started tutorial. As tracking category usage matures, graduate to the more advanced tutorials for sophisticated capabilities. Once the details are entered, click « Save » and the new tracking category will now be available for use.

Xero Tracking Categories allow SaaS businesses to isolate financial results by plan or product. Tracking Categories transform Xero from a basic bookkeeping tool into a powerful reporting engine. They give you a cleaner way to organize your data, make apples-to-apples comparisons across business segments, and ultimately support better, faster decision-making.

To create a new tracking category, click the « Add Tracking Category » button. This allows you to easily map your tracking data to the appropriate Xero object fields for uploading. Tracking categories and projects in Xero serve different purposes when analyzing financial data.

Selecting Appropriate Tracking Categories for Your Business

Using tracking per store enables them to monitor individual store performance while rolling up to an aggregate view. Firms that handle multiple legal specialties can use tracking to understand which practice areas drive the most revenue—and which consume the most resources. By tracking income and related costs by “Product Tier,” you can see which offerings are most profitable or which require more support.

Step 3: Apply Them to Transactions

Whether it’s tracking locations, sales reps, brands, or other attributes, tracking categories let you tag transactions for deeper slicing and dicing of your financial data. Xero allows organizations to have two active Tracking Categories, with each category supporting up to 100 tracking options or names. When entering transactions such as invoices, bills, and bank transactions within Xero, you can assign tracking categories to tag the financial data. Xero’s tracking categories feature allows users to tag transactions and track performance across different segments of their business. This provides enhanced visibility into financial data and helps inform better decision making. With some planning and configuration, tracking categories offer a flexible way to enhance business insights within Xero.

For example, a business can create tracking categories for each department – Sales, Marketing, Operations. When employees submit expense claims, they can tag each expense with the relevant department. By continually optimizing business accounting practices with Xero and tracking categories, companies can unlock even greater financial visibility and control. Double check that the transaction now shows under the right tracking category in reports.

Retail businesses with multiple storefronts—whether they’re boutiques, coffee shops, or bike shops—need to track the performance of each location individually. Tracking Categories make it easy to view location-based performance without complicating the chart of accounts. With some strategic planning around tracking setup, the possibilities for tailored financial insights are truly endless within Xero. If you try to “encode” both project and job into one long tracking option (e.g., “Long Street 123 — Foundation Works”), your list explodes and reporting becomes messy. Better to keep separate dimensions and use a proper job-costing layer for the rest.