“Tracking categories” is a xero feature that allows you to set up different cost centres. You can have 2 tracking categories, and each category can have up to 100 tracking options.
Once you’ve set up a few different tracking options, you can allocate these to sales invoices, bills, spend/receive money transactions, and much more.
For example, when you raise an invoice, you usually have columns for the description, quantity, amount. You would have an extra column called “location”.
On the face of it, it may not seem like much use to you. However, Tracking Categories is a really powerful reporting tool.
Ways we have seen our clients use tracking categories:
- Businesses with different locations, this allows you to monitor sales/costs per location.
- For service based businesses, assigning a customer contact for each sales invoice. A useful way to monitor an employee’s workload. How many customers are they looking after?
- For Businesses with Sales generating employees – it allows you to track the level of income generated by each person every month, and compare this to the associated salary costs.
- Businesses that get a lot of work referred to them, maybe you want to start tracking where the work is coming from?
Once you have started using tracking categories in your business, you can start running reports on them. Maybe you want to see a profit and loss report for each shop location.
If you’re someone who loves seeing the metrics & graphs like this, you may be interested in our Management Accounts service! We can provide reports that are tailored to your business, and of course incorporate your tracking categories into them. This allows us to provide some really useful KPIs to help you understand your business better.
Equally – if you’re someone who hates the nitty gritty numbers you’re not sure where to start with reporting, you may be interested in our Monthly Reporting service. This will provide you with a bit of extra reassurance that you’re on track with profit, and make sure you understand your numbers!
If you have any questions on this, or would like to know how to use tracking categories within your own Xero account, please just pop us an email at firstname.lastname@example.org.
For more Xero tips and training, check out our Xero Training Playlist on YouTube.