Xero Chart of Accounts Preparation

What the Chart of Accounts Is

The chart of accounts is Xero’s list of all the financial categories in your business — revenue accounts, expense accounts, assets, liabilities. Every transaction in Xero gets assigned to one of these accounts.

When we integrate another system with Xero (a CRM, invoicing platform, or job management tool), we need to know which accounts to map transactions to. Getting this right upfront means your financial reporting stays accurate from day one.

Which Accounts We Typically Map To

The specific accounts depend on your integration, but these are the ones that come up in almost every project:

Revenue Accounts

Where income from sales, services, or jobs gets recorded. You might have:

• A single “Sales” or “Revenue” account
• Multiple accounts broken out by service type, product line, or business unit

If your integration creates invoices in Xero, we need to know which revenue account each line item maps to.

Accounts Receivable

Where unpaid invoices are tracked. Xero has a default Accounts Receivable account, and most businesses use that. If you’ve customized yours, let us know.

Expense Accounts

If the integration tracks costs (materials, subcontractor expenses, job costs), we need to know which expense accounts to use. Common ones:

• Cost of Goods Sold
• Subcontractor Expenses
• Materials / Supplies

Bank Accounts

If payments are being recorded through the integration, we need to know which bank account to record them against.

Setting Up Tracking Categories

Tracking categories in Xero let you tag transactions with additional dimensions — like department, location, or project. They’re useful when your integration spans multiple business areas and you want to filter reports.

When to Use Tracking Categories

• You have one revenue account but want to see income broken out by service type
• You want to track revenue by location or region
• You need to report on transactions by source system

Setting Them Up

1. In Xero, go to Accounting, then Advanced, then Tracking Categories
2. Create a new tracking category (e.g., “Service Line” or “Source”)
3. Add the options (e.g., “Plumbing,” “Electrical,” “HVAC” or “Jobber,” “Manual”)

We can then assign the appropriate tracking category to each transaction the integration creates.

Naming Conventions That Help

When we map transactions to accounts programmatically, we match on the account code or name. A few conventions make this more reliable:

• Use consistent, specific account names. “Consulting Revenue” is better than “Revenue 2.”
• Don’t rename accounts after integration goes live without telling us. The mapping will break.
• Use account codes. Xero lets you assign numeric codes to accounts (200, 400, etc.). Codes are more stable than names for automated mapping.
• Keep a clear distinction between similar accounts. If you have “Sales - Product” and “Sales - Service,” make sure the names are obviously different.

Preparing Before Integration Starts

Before we begin, review your chart of accounts and confirm:

1. All the accounts we need exist. If you don’t have a revenue account for a specific service line, create it now.
2. Accounts are active. Archived or inactive accounts can’t receive transactions.
3. Account types are correct. A revenue account should be typed as Revenue in Xero, not Expense. Incorrect types will skew your reports.
4. Tracking categories are set up if you plan to use them.
5. Talk to your accountant. If you’re not sure about your chart of accounts structure, check with your accountant or bookkeeper before we start. Changes after integration go-live require remapping.

Common Issues

Transactions Going to the Wrong Account

This is almost always a mapping issue. If invoices are landing in the wrong revenue account, check whether the account name or code changed, or whether the mapping rules need updating.

Missing Tracking Categories on Transactions

If tracking categories are required in your Xero settings but the integration isn’t sending them, transactions may fail or land without categorization. Make sure we know about any required tracking categories during setup.

Account Codes Conflicting

If you use account codes, make sure there are no duplicates. Xero won’t allow duplicate codes, but if you’re migrating from another system, legacy codes may conflict.

Next Steps

• Set up API access to Xero: Xero API Setup
• Understand the full onboarding process: What We Need from You
• Learn more about our Xero CRM Integration Services