Xero Tracking Categories: Automate Ecommerce Tags, Check 2 Reports
Yes, ecommerce sellers should use Xero tracking categories, because they split your Profit & Loss by channel, warehouse, or region. They are a reporting layer, not a replacement for the chart of accounts. Apps like Expandly can tag orders automatically, and we post settlements to Xero ourselves at BeanHawk.
TL;DR:
- Create categories only for questions you review regularly, starting with sales channel; tracking adds reporting detail but does not replace your chart of accounts.
- Tag invoice, bill, or journal lines individually, then check the Tracking Summary for unassigned activity before trusting channel totals each month.
- Integrations can map store or inventory fields, such as channel or warehouse, to tracking options, reducing manual tagging as order volume grows.
- Use Profit and Loss comparisons for side by side channel margins and Tracking Summary for option totals; purchase orders and quotes are excluded.
Table of Contents
- What tracking categories do for ecommerce sellers
- How to create and assign tracking categories in Xero
- How integrations map ecommerce channels to tracking categories
- Running tracking reports: Profit & Loss compare and Tracking Summary
- Best practices for ecommerce sellers
- Why disciplined tagging pays off
- How we remove manual reconciliation work
- FAQ
- Sources
What tracking categories do for ecommerce sellers
Your chart of accounts answers “what kind of transaction was this?” A tracking category answers “where or who did it come from?” Xero describes tracking categories as a reporting tool rather than an accounting classification, giving you a second level of detail without adding many ledger accounts. That keeps your books lean while still letting you slice revenue and costs.
For online stores, the most useful splits are:
- Sales channel: Amazon, Shopify, wholesale, or a marketplace variant.
- Warehouse or dispatch location: your own stockroom versus a fulfillment center.
- Region or market: domestic versus international orders.
- Campaign type: a promotion or seasonal push you want to judge on its own.
Create only what you will actually review. Xero’s own guidance says to use categories only if you plan to review the segmented data regularly, since unused ones just add bookkeeping work. If you have never asked “which channel makes me money?”, start with that single question and one category.
For help structuring the accounts underneath, see our guide to building an ecommerce chart of accounts.
How to create and assign tracking categories in Xero
Setup takes a few minutes. Exact menu labels can shift as Xero updates its interface, so confirm against Xero Central if a screen looks different.
- Open Settings and choose Tracking categories (in some versions it sits under Advanced settings).
- Click Add tracking category and name it, for example “Sales Channel”.
- Add options such as “Amazon”, “Shopify”, and “Wholesale”, then save.
- Repeat for a second category if you need one, such as “Warehouse”.
- When you enter an invoice, bill, or journal, pick the option on each line item.
- Review any line left without an option, since those show up as unassigned.
Tagging happens at the line level, so one invoice can carry different options on different lines. Xero allows tracking categories to provide additional reporting detail, such as a view by channel or location. Activity without an option is reported as unassigned, and the Tracking Summary report flags it so gaps are easy to spot.
Pro Tip: Pick short, consistent option names once (“Amazon”, not “Amazon US” in one place and “AMZ” in another), because Xero treats each spelling as a separate option and your reports will fragment.
How integrations map ecommerce channels to tracking categories
Manual tagging can become cumbersome as order volume grows, and mistakes may creep in. Integration apps solve this by mapping a field from your store or inventory system to a tracking option automatically.
Common mapping patterns look like this:
- Sales channel to tracking option: each order lands under Amazon, Shopify, or wholesale.
- Warehouse or fulfillment location to tracking option: stock movements follow the site that shipped them.
- Marketplace settlement to journal lines: a payout is broken into sales, fees, and refunds, each tagged to its channel.
The vendors describe this directly. inFlow pushes invoices, bills, cost of goods sold, and inventory value into Xero and can apply tracking categories by mapping fields like location, sales rep, or product category. Expandly says it assigns orders to the right tracking categories so sellers can spot international orders, dispatch locations, and sales channels without manual tagging. Xero also lists ecommerce apps that connect your stores for this purpose.
The payoff is cleaner cost of goods sold, reconciled inventory, and fewer manual edits. Automation matters most when you sell on several channels or process many orders. For more on the integration side, read our post on automating ecommerce accounting. If you run paid campaigns, tagging them consistently also helps, and this guide on UTM tracking best practices shows how to keep campaign labels clean upstream.
Running tracking reports: Profit & Loss compare and Tracking Summary
Two reports do most of the work.
Profit & Loss with compare. In Xero’s Profit and Loss report, you can set columns by tracking category and compare options side by side. Put Amazon, Shopify, and wholesale next to each other and you see margin by channel in one view.
Tracking Summary. The Tracking Summary report shows activity for each option across the account types you select. Use it when you want a ledger-style total per option rather than a full P&L.
Practical points when reading them:
- Choose only the options you need, then apply filters for the period you are reviewing.
- Check opening and closing balances per option, and look at the unassigned line before trusting any total.
- Remember that purchase orders and quotes do not appear in the Tracking Summary.
- Compare reports for many options will load more slowly.
Xero notes that selecting many variables in a compare report limits columns and slows loading, so pick only the options you plan to read. Treat the exact column cap as something to confirm in the current Xero documentation, since limits can change.
Best practices for ecommerce sellers
Keep the setup small and the habits regular.
- Decide your reporting questions first, then build only the categories that answer them.
- Standardize naming and write down your mapping rules, such as “Amazon FBA orders map to the Amazon option”.
- Archive options you no longer use so pickers stay short.
- Hold a monthly review of your P&L by channel and fix unassigned lines while they are fresh.
- Keep your chart of accounts tidy, since tracking sits on top of it and cannot repair a messy ledger.
A well-kept P&L is a real decision tool, and Xero notes that connecting bank feeds and ecommerce platforms is what keeps it current.
Pro Tip: Pair tracking categories with an automated integration and a documented chart of accounts, so cost of goods sold and inventory reconcile without hand edits.
Why disciplined tagging pays off
A common problem is a seller with multiple channels and one blended margin. Everything looks fine until you split it out and find one channel quietly losing money after fees and returns. Consistent tracking plus automation turns that blind spot into a monthly habit. Write your mapping rules down, check your P&L by channel once a month, and adjust pricing or ad spend based on what each channel really earns.
, Tim
How we remove manual reconciliation work
If you sell on Amazon and use Xero, we built BeanHawk to take the posting and matching off your plate. Here is what we handle:
- We help with FBA reimbursement workflows.
- We post summarized settlements to Xero to support reconciliation across channels.
- We provide inventory-related reporting. See our pricing page for current plan details.
For high-volume sellers, that means summarized settlements are posted to Xero to support reconciliation across channels. The simplest next step is our free FBA reimbursement audit, or you can compare plans on our pricing page, where Starter is $19 per month.
FAQ
How do I report on tracking categories in Xero?
Open the Profit and Loss report and set its columns to a tracking category to compare options side by side. For ledger-style totals per option, run the Tracking Summary report.
How do I set up inventory in Xero?
Xero’s built-in inventory updates stock levels when you create invoices or purchase orders. For multi-location tracking or forecasting, you can extend it with a connected inventory app.
What country is Xero based in?
Xero is a global cloud accounting platform with offices in several countries. App availability and documentation vary by market, so check the Xero offices page and confirm features for your region.
Can Xero tracking categories separate Amazon and Shopify sales?
Yes. Create a “Sales Channel” category with an option for each, then tag lines manually or through an integration. Apps listed in the Xero ecommerce directory can automate the tagging.
Sources
- Set Up a Chart of Accounts | How to do Bookkeeping | Xero US
- Tracking Summary report , Xero Central
- Expandly Xero Integration Reviews & Features , Xero App Store US