Introduction
Xero’s inventory tools help you track stock levels, manage item details, and maintain accurate cost and sales information. Whether you’re adding items manually or importing them in bulk, proper setup ensures smooth invoicing, reporting, and stock control. This guide covers how to add, import, track, and adjust inventory in Xero.
How to Add Inventory Items in Xero?
Step 1: From the dashboard, go to Sales, choose Products and services.
Step 2: Click New item.
Step 3: Enter the item code, and description. Tick track this item if you want Xero to monitor stock levels.
Step 4: (Optional) Enter Purchase and Sales details:
Purchase section – This is used if you buy the item from suppliers. You can enter the cost price, choose the Cost of Goods Sold account, and select the tax rate. Add a purchase description to appear on bills or purchase orders.
Sales section – This is used if you sell the item to customers. You can enter the sale price, choose the Sales account, and select the tax rate. Add a sales description to appear on invoices or quotes.
Is it compulsory when tracking is enabled?
Yes — for tracked items, you must enter both Purchase and Sales information so Xero can manage stock, calculate the item’s average cost, and create the correct accounting entries.
No — if you don’t want to provide purchase/sales details, you should leave the track this item box unticked, and the item will behave as a simple non-stock item.
Step 5: Click Save.
How to Track Inventory in Xero?
Step 1: From the dashboard, go to Sales, choose Products and services.
Step 2: Choose any tracked item to view current quantity, average cost, and stock movements.
Step 3: Scroll down to the activity section to see a detailed history of the item. Here, you can view all transactions affecting the stock, including sales invoices, purchase bills, and previous stock adjustments.
This helps you understand how quantities have changed over time and provides a clear audit trail for accurate reporting.
How to Import Inventory into Xero?
There are two ways to import inventory into Xero:
Opening Balances – Use this if you already have stock. This method records your current stock quantities and values so your accounts and inventory are accurate from the start.
Items – Use this to add new products. You can set details like item codes, descriptions, prices, accounts, and tax information, making future sales and purchases easier to manage.
How to Import Inventory Items into Xero
Step 1: From the dashboard, go to Sales, select Products and Services.
Step 2: Click Import, then select Items.
Step 3: Download the CSV template provided by Xero.
Step 4: Fill in the template with your item details, including item code, item name, and optional purchase/sales information and tracking settings.
Step 5: Upload the CSV file to Xero and click Next.
Step 6: Click Complete Import.
How to Import Inventory Items Opening Balance into Xero?
Step 1: From the dashboard, go to Sales, select Products and Services.
Step 2: Click Import, then select Opening Balances.
Step 3: Fill in the Date of opening balance. Download the opening balance file provided by Xero.
Step 4: Enter the opening quantity on hand and unit cost for each item, following Xero’s format.
Step 5: Upload the completed file and click Continue to import.
Step 6: Click Complete Import.
How to Adjust Inventory (Stock Adjustment) in Xero?
Sometimes your stock levels need to be updated due to sales, damaged goods, theft, or other reasons. Xero allows you to make stock adjustments so that your inventory records always reflect the true quantities on hand.
Step 1: From the dashboard, go to Sales, select Products and Services.
Step 2: Select the tracked item you want to adjust.
Step 3: Click New Adjustment.
Step 4: Enter whether to increase or decrease the quantity and select the date of adjustment.
Step 5: Choose the account that will reflect the adjustment (e.g., Cost of Goods Sold, Damaged, Stock Lost).
Step 6: Add a reference, then click Next.
Step 7: Review the adjustment, then click Post Adjustment. It will then reflect your adjusted stock.
How to Create a Bill of Materials (for Simple Assemblies)?
Xero doesn’t have a full manufacturing BOM module, but you can simulate it using Tracked Items + Manual Journal Entries:
Create each component as a tracked inventory item.
When assembling products, record a Stock Adjustment:
Reduce stock for raw materials
Increase stock for assembled products
This reflects accurate stock movement for basic assembly tracking.
Alternative: For complex BOM or manufacturing needs, consider Xero add-ons like DEAR Systems, Unleashed, or Cin7 for advanced inventory control.
How to Maintain Effective Inventory Control?
Effective inventory control ensures you always have the right stock on hand, reduces waste, and helps with accurate reporting. Some best practices include:
Regular stock counts: Conduct physical inventory checks to verify quantities.
Monitor stock movements: Track sales, purchases, and adjustments to identify trends or discrepancies.
Set reorder levels: Ensure popular items are reordered before they run out. (This feature is not available in Xero)
Use tracked items in Xero: This lets you monitor quantities, costs, and stock value in real time.
Keep clear records: Maintain notes for adjustments, damaged goods, or write-offs to support audits.
Frequently Asked Questions (FAQs) about Xero Inventory Feature
Q: Can I import opening balances and new items at the same time?
A: No, Xero requires opening balances and new items to be imported separately to maintain accurate records.
Q: What happens if my CSV file has errors?
A: Xero will show an error message and stop the import. Make sure your data follows Xero’s required format before uploading.
Q: Can I edit items after importing them?
A: Yes, imported items can be updated later, including quantity, price, and tracking details.
Q: Do I need to import stock for each location separately?
A: Yes, if you track stock by multiple locations, each location’s inventory needs to be imported individually.
Q: Can I undo an import if I made a mistake?
A: Xero doesn’t provide an undo option. You’ll need to adjust or delete the imported items manually.
Conclusion
Importing inventory in Xero is a simple way to manage stock efficiently. Use Opening Balances for existing stock and Items to add new inventory. Correctly importing items ensures accurate reporting, reduces manual work, and minimizes errors.