Introduction
Tracking Categories in Xero let you organise financial data by department, project, branch, or any internal segment. They help monitor performance, filter reports, and make comparisons easier. For Malaysian users, one category is partially reserved for e-Invoicing compliance.
How to Create Tracking Categories in Xero?
Step 1: From your Xero dashboard, go to Accounting and select Accounting settings.
Step 2: Select Tracking Categories.
Step 3: Click Add Tracking Category.
Step 4: Enter a category name (e.g., Department, Project, Branch).
Step 5: Add tracking options (e.g., Sales, Marketing, HQ). Click Save to activate the tracking category.
Step 6: Your newly created tracking category will now appear in the list of saved categories.
How to Apply Tracking Categories to Transactions
Step 1: Open the transaction you want to code (invoice, bill, spend money, receive money, journal, etc.).
Step 2: In the Tracking section on each line item, choose the relevant option. For example, you might have two tracking categories such as Region and Department.
Examples:
Bills: Apply tracking per line item when entering supplier bills.
Receive Money: Apply tracking when recording customer payments.
Manual Journal: Assign tracking to each journal line as needed.
Step 3: Save or approve the transaction to apply tracking.
How to Use Tracking Categories for Reports?
Step 1: From your Xero dashboard, go to Reporting and select Profit and Loss.
Step 2: Open a report that supports tracking (e.g., Profit and Loss, Balance Sheet, General Ledger).
Step 3: In the report settings, find the Tracking filter.
Step 4: Select the category and option you want to analyse. Click Apply filter.
Step 5: Update the report to view results by department, project, or branch.
Step 6: The report will display data for the selected tracking category. Export to PDF or Excel if needed for internal use.
How Many Tracking Categories Can You Create in Xero?
⚠️ Malaysia e-Invoicing Update:
One of the two tracking categories will be automatically occupied by Xero’s e-Invoicing integration (for MyInvois compliance tagging).
This means:
1 tracking category is reserved for e-Invoice metadata (document type, validation code, etc.).
You’ll have only 1 remaining custom tracking category for business use (e.g., department, cost centre, or branch).
How to Edit or Archive Tracking Categories?
Step 1: From your Xero dashboard, go to Accounting and select Accounting settings.
Step 2: Select the tracking category you want to modify. To edit, click Rename to update the category or options name.
Step 3: To delete an option, click the X button next to it. (Archived options cannot be used in new transactions.)
Step 4: To add options, click Add Another Option.
Step 5: Enter the name of the new option and click Save.
Frequently Asked Questions (FAQs) about Xero Tracking Category
Q: Can I reactivate an archived tracking option?
A: Yes. Open the tracking category, scroll to Archived Options, and click Restore.
Q: Will archiving a tracking option affect past transactions?
A: No. Historical records remain unchanged and still show the archived option.
Q: Can I rename a tracking category without affecting reports?
A: Yes. Renaming only updates the label. It does not change how past transactions are reported.
Q: Can tracking categories be used in bank rules?
A: Yes. You can assign tracking directly in bank rules to automate transaction coding.
Q: Are tracking categories supported in the Xero Mobile App?
A: Yes. When creating bills or invoices from the app, you can apply tracking options on each line.
Conclusion
Tracking Categories simplify financial analysis by grouping transactions into meaningful segments. They improve reporting, support performance insights, and, in Malaysia, allow one custom category for operational use alongside the e-Invoicing compliance category.