What’s the Easiest Way to Track What Each Job Has Cost Me?
If you’re running a construction company, you’ve probably asked yourself:
“What did that job actually cost me?”
Here’s the direct answer:
👉 Use Xero’s tracking categories to record income and costs by job.
It’s the simplest, most reliable way to understand project profitability in real time — without wrestling with spreadsheets or waiting for your accountant’s year-end report.
What Are Xero Tracking Categories (and Why Do They Matter)?
In 40 words:
Xero tracking categories let you tag every invoice, bill, and payroll cost to a specific project or site. This means you can instantly see how much each job earned, how much it cost, and what margin it produced — inside your accounts.
In practice:
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Create a Tracking Category called “Job” or “Project.”
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Add each live site as a tracking option (e.g., Finch House Extension, Old Mill Refurb).
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Every time you record income or expenses in Xero, select the relevant job name.
This simple step transforms Xero from a bookkeeping tool into a real-time job cost dashboard — helping you make quicker, sharper business decisions.
How to Set Up Job Costing in Xero Step-by-Step
1. Create Tracking Categories
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Go to Accounting → Advanced → Tracking Categories.
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Name the category something clear (like “Jobs” or “Sites”).
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Add each project as an option.
2. Tag All Income and Costs
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When entering sales invoices, select the relevant job.
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When recording bills, purchases, or payroll, choose the same tracking option.
This ensures all costs and revenue flow into that project’s mini profit & loss view.
3. Run Tracking Reports
Go to Reports → Profit & Loss → Compare by Tracking Category.
Now you can instantly see:
| Job | Income | Costs | Profit | Margin % |
|---|---|---|---|---|
| Finch House Extension | £182,000 | £152,500 | £29,500 | 16% |
| Old Mill Refurb | £94,000 | £86,000 | £8,000 | 9% |
Seeing this level of clarity — in real time — helps you spot which jobs make money and which drain cash.
Why This Beats Spreadsheets Every Time
Tracking categories replace the messy manual process of exporting invoices and bills to Excel.
With Xero doing the work:
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No double entry. Every cost is recorded once and reported correctly.
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Live data. You see margins as the project unfolds, not months later.
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Better decisions. You know which clients, job types, or subcontractors deliver profit.
At Thomas Emlyn Ltd, we’ve seen construction firms raise margins by 3–5% within months of implementing this — simply by identifying and correcting underperforming projects earlier.
How Xero Tracking Supports Cashflow Management
Good cashflow starts with knowing where your money goes.
By tagging every cost to a project:
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You can forecast future site costs with confidence.
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Spot late-paying clients or over-budget materials quickly.
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Build a stronger cashflow forecast linked directly to job progress.
Pairing this with a Virtual Finance Office (VFO) setup ensures your team has daily financial visibility — without drowning in admin.
That’s exactly how Thomas Emlyn Ltd helps clients take control of both profitability and cashflow.
What’s the Difference Between Tracking Categories and Projects in Xero?
Xero has both Projects and Tracking Categories — but which should you use?
| Feature | Xero Projects | Tracking Categories |
|---|---|---|
| Best for | Time & materials tracking | High-level job profitability |
| Cost | Paid add-on | Included in all plans |
| Detail | Tracks hours, expenses | Tracks transactions |
| Setup complexity | Moderate | Simple |
| Ideal for | Firms with on-site teams using Xero Projects mobile app | Firms wanting simple job cost visibility without extra software |
For most construction SMEs, tracking categories are the sweet spot — fast to implement and powerful enough for accurate job-by-job reporting.
Example: How One Contractor Found Hidden Profit
A mid-sized contractor in Essex (client of Thomas Emlyn Ltd) thought their average gross margin was 18%.
After implementing Xero tracking categories, the data told a different story:
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Domestic jobs were averaging 22% margin.
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Commercial refurbishments were only 9%.
Within two months, they rebalanced pricing, tightened supplier controls, and dropped unprofitable work — lifting average margin to 20.5% overall.
That’s the kind of insight you only get when job costing is part of your financial system, not an afterthought.
How Thomas Emlyn Ltd Helps You Get This Right
As part of our Virtual Finance Office and Virtual Finance Director services, we:
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Set up Xero tracking for each active job.
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Train your team on coding invoices and expenses correctly.
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Build job profitability dashboards in Fathom or Excel linked to Xero.
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Review job margins in your monthly finance meetings.
The result?
You understand exactly which projects generate cash, which clients are most profitable, and where to tighten control.
FAQs: Tracking Job Costs in Xero
1. Can I use tracking categories for subcontractor payments?
Yes — every CIS payment or labour invoice can be tagged to a job. When reconciled, it gives an accurate cost-per-project including labour, materials, and overheads.
2. How many tracking categories can I have in Xero?
You can create up to two categories, each with multiple options (e.g. Job and Division). Many firms use “Job” and “Manager” to see both project and team performance.
3. What if I already use spreadsheets — can I migrate easily?
Absolutely. You can import historic project data into Xero using CSV templates, then start tagging new transactions going forward. We often set up a “go live” month for a clean break.
4. Is this compliant with UK accounting standards?
Yes. Tracking categories sit entirely within standard Xero reporting and align with UK GAAP bookkeeping. They enhance accuracy — they don’t change accounting entries.
5. How long does setup take?
For most construction businesses, less than a day. Thomas Emlyn Ltd typically implements it alongside other system upgrades, ensuring your reports are accurate from day one.
Final Thoughts: Turn Your Xero Into a Construction Profit Engine
If you’re serious about understanding where your profits come from — and where they leak — tracking categories in Xero are the simplest, most powerful first step.
They give you:
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Real-time clarity on every project.
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Control over costs.
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Confidence in pricing the next job.
And with expert setup and support from Thomas Emlyn Ltd, you can go from guessing to knowing — without extra admin or stress.
✅ Next step: Book a short discovery call here to see how your job tracking can plug directly into your cashflow and strategy.
Thomas Emlyn Ltd
Stronger Margins – Healthier Cashflow – Sustainable Growth
