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Using Tracking in Xero - A Step by Step Guide


As a business owner, it is very important to know how much profit you are making on an on-going basis and also to be aware of where in your business your profit is being generated. Setting up tracking categories in Xero allows you to see how different areas of your business are performing.

Here are some examples where our clients are using tracking:

• A property investor uses tracking to track by property.
• A retailer uses tracking to track by shop location.
• An architect uses tracking to track by project.

When you set up tracking categories in Xero you can then assign a tracking category to any of your transactions in Xero. Assigning a tracking category is optional, so you can ignore it when it is not relevant.

Let’s look in greater detail at how this works for our property investor. Firstly the tracking categories are set up as follows:

General Settings
Add Tracking Category
Tracking Category Name – Property

Category options
This is where we list the individual properties, which might be
12 High Street
23 Grove Crescent
55 Ashgrove Lane

We would enter these in shortened form as follows:

Xero allows you to enter up to 100 items in your category list. Once all properties have been listed, click on Save.

Now let’s look at how we actually do the tracking. The property investor invoices monthly for each property. When the sales invoice is prepared in Xero there is now a new tracking field available called Property. From the drop-down menu we can select the property or add a new property if required.

When the property investor records a purchase invoice in Xero it can also be tracked by property.

When it is not relevant to track a transaction by a property, the property field can just be left blank.

Now to the exciting part! Let’s look at how our client benefits from Tracking when viewing the Profit and Loss Report in Xero.

To view the profit and loss account:

Profit and Loss
Show Date Range
Enter from and to dates
More options
Filter by Property – All Properties

We now have a profit and loss showing the performance of the business property by property.

From this simple step-by-step guide we hope that you agree that using Tracking in Xero is a great way to see how different areas of your business are performing.