Job cost tracking and Xero

HomeInformation Centre
project managers using xero projects
Cloud Accounting
Partner & Head of Accounting
October 12, 2020
minute read

How Xero Projects can help you streamline and improve your job cost tracking

In any business, accurate project management is necessary to keep your time and costs on track. Without it your projects can bloat, scopes can creep, time gets wasted, and costs go up.

Xero Projects is job cost tracking software offered by Xero that combines your accounting and project management needs in one. Xero job tracking is the future for many businesses.

Liston Newton Advisory are Xero Gold partners — so it’s safe to say that we love using Xero for job tracking. Contact us today to learn how Xero can help keep your job cost tracking on point, and keep your business on track.

What is job cost tracking?

Particularly in trade, consulting, and service-based businesses, one big challenge that businesses of all sizes face is that of tracking time and costs spent on jobs.

In industries where the work is labour-intensive and service-based, tracking job costs is critical. Doing this accurately allows you to monitor and manage the resources and costs associated with specific jobs, enabling you to determine the overall profitability of each.

This type of analysis enables business owners to proactively identify inefficiencies in their workflow, allowing them to fix them in a timely manner. By monitoring the variables within a job, you can assess whether too much labour or cost is associated with it, and if it’s been priced incorrectly to start with.

Done correctly, job cost tracking allows you to break down each job you complete into discrete manageable variables, and provide your business with the financial numbers required.

Xero already makes cost tracking easy

Built-in job cost tracking has been a feature of Xero for a number of years now. Known as tracking categories, this is where income and expenses are allocated to specific categories when reconciled. This information can then be gathered to build a specialised report.

For example, say your business is renovating a warehouse, which you log in Xero as ‘Warehouse Renovation’. All income and expenses related to this job are allocated the ‘Warehouse Renovation’ tracking code at reconciliation. You can then create a profit and loss report against this job.

Sounds simple, doesn’t it?

But Xero have now gone one better and created their own project management extension.

Xero Projects is your new job cost tracking tool

Xero Projects integrates all your typical Xero project information into a powerful piece of software that provides more comprehensive and accurate reporting for your jobs.

You can use Xero Projects to manage your projects, and keep track of your job costs and hours. You can then use this information to raise and issue invoices based on specific percentages of these costs.

Whether it’s the total overall project cost, cost of materials to date, or hours worked, Xero Projects makes it easy to accurately invoice for your projects. This lets you keep a better record of what you’ve invoiced your client to date, and gives you a precise report on what they owe you, too.

Where Xero Projects really shines over its original cost tracking feature is the ability to track employee timesheets and assign these to your projects. While this is available in Xero's main skill stack, it can be a difficult, time-consuming process.

Xero Projects makes it simple, taking it a step further by feeding this information directly to Xero Payroll, so your staff get paid the hours on their project timesheet.

Xero Projects job cost tracking features

Here are some of Xero Projects’ other key features that are a big boon to businesses.

  • Compare actuals against your budget. You can create a budget for all aspects of a job, then review this to see where variances have occurred.
  • Capture every job cost. You can assign discrete job costs against projects, regardless of size or type. It can be expenses, bills, deposits—it all gets captured.
  • Quote based on previous jobs. You get full visibility of similar-sized projects to make sure you’re quoting correctly, and pricing realistically.
  • Access to Xero Projects app. A handy app that allows you to create projects, capture expenses, and manage job costs and profitability, without needing to log into your Xero platform. You can also track time with stop-start timers, manage staff projects to ensure they’re working on the right things, and manage travel with location-based travel tracking.
  • Easy invoicing. You can invoice for time spent on the project, plus expenses, and even a margin.
  • View profitability in real-time. You’re able to track jobs down to the minute, and see your costing and profitability as soon as it’s logged.

The pros and cons of Xero Projects

We want to provide a balanced view of Xero Projects, so it’s important that we outline both the advantages and the disadvantages of this software.


  • It’s simple to use and easy to understand.
  • Xero Projects makes it easy to create timesheets and track costs.
  • You get a real-time view of your profitability, with a central system that syncs this information across all touchpoints—no more spreadsheets.
  • It provides a professional quoting tool, and easier invoicing.


  • Projects creates an additional bookwork. While Xero Projects does the majority of the work for you, it does rely heavily on your inputting all costs and timesheeting information correctly in the first instance.
  • Increased cost. Depending on the number of employees you have, and staff using the software, the costs add up. It’s $10 per month for the first user, then an extra $7 per month for each additional user.

Overall though, when used correctly Xero Projects provides an intelligent, time-saving tool that allows you to streamline and improve how you track your business job costs.

How job cost tracking integrates with Xero accounting and WorkflowMax

As we mentioned earlier, job cost tracking can actually be done across a range of the Xero accounting platform family. Your job cost tracking is completed through your regular Xero accounting platform when you reconcile your transactions.

As the main software platform, this integrates directly with Xero Projects, allowing information to flow both ways. So for example, if you log an invoice in Xero Projects this is automatically assigned a tracking category.

Xero Projects is essentially an add-on to the Xero accounting platform that enables a more granular and streamlined way to manage your job cost tracking.

You might have heard of WorkflowMax. This is essentially a more powerful version of Xero Projects, and more suitable to bigger businesses with high volumes of projects and a large number of staff. The good news is that Xero integrates with this platform too.

The final word

Job cost tracking is crucial to ensure your business’ financials remain on track, and that you’re pricing and invoicing your work correctly.

Xero Projects takes the headache out of your job cost tracking. Syncing directly to Xero, you can log and track your individual project costs in real-time, removing data double-handling, and speeding up your timesheeting. It pays to use Xero job tracking for your business.

Related articles