Let’s have a quick, honest chat about how Xero’s Tracking Categories can transform your business insights.
Hands up if you pay your Xero subscription every month, log in to send invoices, maybe do a bank reconciliation when you get a reminder… and that’s about it?
If your hand is up, you’re not alone. So many trades and field service business owners I talk to are using Xero as a very expensive digital shoebox. They put all the info in, but they never get any real, usable intelligence out.
You’re busy running crews, quoting jobs, and putting out fires (sometimes literally). You don’t have time to dig through reports you don’t understand.
But what if I told you that Tracking Categories is a built-in feature in Xero that, with as little as 15 minutes of setup, can completely change how you see your business?
Stop thinking of them as an accountant thing. Think of them as data tags. You just tag every dollar that comes in (invoices) and every dollar that goes out (bills and expenses) with a specific label.
When you do that, Xero stops being a shoebox and starts being a powerful insights machine.
Here are 5 ways you can use Tracking Categories to actually figure out what’s going on in your business.
1. Finally Know Your Actual Job Profitability
This is the big one. You finish a job, the client pays, and it feels profitable. But was it? After paying the team, the materials, the subbies, the fuel, did you really make money? Stop guessing.
What to do: Create a Tracking Category called Jobs (or Projects, Job Number, whatever you call them). This is the perfect way to get job profitability insights without having to pay extra for the Xero Projects add-on module. Then, every single time you enter a bill for materials, pay a subcontractor, or send a sales invoice, you tag it to that specific job name (e.g., “12 Smith St Reno,” “Jones New Build”).
The Result: You can now run a Profit & Loss report for 12 Smith St Reno. You’ll see every dollar in, every dollar out, and the exact profit (or loss) at the bottom. Instantly. You’ll know which jobs are your winners and which ones are just expensive hobbies.
2. Find Out Which Services Are Your Goldmines
Most tradies I know don’t just do one thing. You might be a plumber, but you also do gas fitting, drainage, and bathroom renos. Which one of those actually makes you the most money?
What to do: Create a Tracking Category called Service (or Trade, Department). List your main service types (e.g., Maintenance, New Installs, Renovations, Emergency Callouts), and tag every invoice and bill to the service it relates to.
The Result: At the end of the quarter, you can run a report to see that Maintenance brings in 40% of your revenue, but Renovations delivers 60% of your profit. Now you know exactly where to focus your marketing budget.
3. Pinpoint Your Most Profitable Locations
Are you driving all over the city for jobs? That travel time costs you money in fuel, in wages, in time you’re not on another job. But which areas are worth the drive?
What to do: Create a Location category. You could set it up by suburb, council area, or just North, South, East, West. Then, tag every job with its location.
The Result: You might discover that while the “Inner City” jobs are smaller, they’re wildly profitable because your travel time is almost zero. You might also find those jobs out in “The Hills” are barely breaking even once you factor in the 45-minute drive each way. Time to adjust your service area or add a travel charge.
4. Residential vs. Commercial
It’s the classic argument. Are the small, quick residential jobs better? Or are the big, chunky commercial contracts the way to go? One has more admin, the other has more competition. Stop guessing.
What to do: Create a Customer Type category with options like Residential, Commercial, Strata, and Builder and tag every invoice and expense to the type of customer it was for.
The Result: Hard data. You’ll see a clear P&L for your Residential work versus your Commercial work. Maybe you’ll find Commercial is high-revenue but low-profit-margin, while your Residential work is the total opposite. This insight is gold for your sales strategy.
5. See Which of Your Team Leads is Nailing It
This one is a bit more advanced, but it’s brilliant. If you have team leaders or project managers responsible for different jobs, you can track their performance.
What to do: Use a category for Project Manager or Team Lead and list their names. When you tag a job’s income and expenses, also tag it to the PM who’s running it.
The Result: You can see which of your PMs are great at bringing jobs in on budget and on time, and which ones might need a bit more support or training. It’s not about playing “big brother”; it’s about identifying your top performers and learning from what they do right.
The One Big Catch You Need to Know
Alright, don’t get too excited. Xero gives you two active Tracking Categories. That’s it. Only two. (Why, Xero? Why?)
This means you have to be smart and choose the two that will give you the most valuable information. For most tradies, the non-negotiable one is Jobs (see point #1).
Your second category is your choice. Do you want to know what you’re doing (Service), where you’re doing it (Location), or who you’re doing it for (Customer Type)?
Pick your top two, set them up, and actually start using them.
Stop letting your Xero account just sit there. Make it work as hard as you do.
Sounds like more admin? Not with me on your team. Implementing Tracking Categories to unlock these insights is included in my most basic package. Drop me a line and let’s get you set up for smarter decisions, not more tasks.
Cheers,
Val