Archive for Xero Accounting

Using Tracking Categories in Xero

What are Tracking Catgories?

It is an optional tool in Xero to allow users to further analyse their business income and expenses.

You can have up to two tracking categories, within which you can have infinite options.

Example

Let’s say you have a business selling shoes. You have 5 stores and sell online, and you sell kids, mens and ladies shoes.

You could categorise your income and your expenses by location (one for each store and one for online) and by shoe type (kids, mens, ladies).

You could then set budgets and run financial reports by location and/or shoe type to see which stores are making the most profit, whether online is more profitable than the store, or whether kids shoes sell better than mens shoes.

Adding these Tracking Categories in Xero simply adds an extra column or two in the Sales, Purchases, Spend Money, Receive Money and Receipts screens. It also means you don’t have to have such a large chart of accounts. Instead of having income accounts for kids shoes store 1, kids shoes store 2, mens shoes store 1, womens shoes store 3 etc, you can use just one income / sales account and use the categories for further analysis.

Tracking Reports

Tracking categories are available in the following reports in Xero:

  • Tracking summary – Account type by category for a specified date range
  • Profit and loss report – full profit and loss report by category for a specified date range
  • Account transactions report – one account for one category for a specified date range
  • Journal report – category by transaction (showing debits and credits) for specified date range
  • Balance sheet – full balance sheet filtered by category for a specific month
  • Fixed asset reconciliation – reconciliation of balance sheet asset values to asset register values filtered by category

Selecting a tracking category for each transaction is optional. When running reports by tracking category, any transaction without a tracking category will be displayed in the “unassigned” field. This makes it simple to run reports on transactions that are missing tracking categories. Category options can be added, deleted or edited at any point.

Tracking in Payroll

These categories can also be used in Payroll to group employees, for example by location, or in Timesheets to allocate time to specific jobs.

For more information about using Tracking categories in Xero, take a look at our Getting Started with Xero course or book a customised training session with us today.