Using Xero for Project Management and Accounting

Most project managers would agree that effectively integrating accounting and project management is challenging.

But with Xero's online accounting software, you can seamlessly manage both your organization's finances and projects in one platform...

In this post, you'll learn how to leverage Xero for end-to-end project management - from tracking time and expenses to generating financial reports and automating workflows.

Introduction to Xero for Project Management

Xero's online accounting software provides powerful features for managing projects alongside financial data. Integrating project management into Xero delivers key benefits:

Exploring the Synergy between Xero Projects and Online Accounting Software

Xero Projects enables seamless management of project finances and accounting within Xero's cloud-based platform. Key features include:

• Track project time and expenses directly in Xero
• Create project budgets and monitor costs in real-time
• Generate project-specific invoices and manage billing
• Review insightful project summary reports

By centralizing project and accounting data, Xero provides visibility into project profitability and cash flow.

The Advantages of Integrating Accounting and Projects within Xero

Integrated accounting and project management in Xero creates streamlined workflows and financial insights, including:

• Real-time understanding of project budget vs. actuals
• Automated project cost tracking without manual data entry
• Ability to make data-driven decisions on project resourcing
• Smoother client invoicing with project cost details
• Single source of truth for project financials

With Xero Projects connecting into the wider Xero ecosystem, businesses can maximize productivity and efficiency.

Can Xero do project accounting?

Xero offers robust project accounting and management features to track budgets, expenses, time, and more across your projects.

With Xero, you can:

• Create projects and track associated jobs and tasks
• Assign expenses or billable time entries to specific projects
• Compare budgeted amounts to actuals for greater visibility
• Run project summary reports to view profitability, expenses, and progress
• Integrate with other apps like WorkflowMax for advanced functionality

For example, you can set up a fixed-fee website design project in Xero, assign staff time and design expenses to that project, and then review financial summaries showing whether you're on track or have gone over budget.

The key benefit is bringing financial oversight into project management. This lets you identify profitable projects to pursue more of, while cutting back on engagements that are consuming resources without delivering results. Tighter project accounting can have a big impact on your agency's bottom line.

With Xero's simple but robust features, plus integrations with specialized tools like WorkflowMax or Trello, you have all you need to do solid project accounting right from your accounting software. The visibility this provides into your most important work can help transform how you run and grow your business.

Does Xero have project management?

Xero offers integrated project management features to help businesses plan, track, and monitor projects efficiently.

Some key capabilities include:

• Project summary dashboard: Get an overview of project status, costs, tasks, and more in one centralized location. Easily track time, expenses, invoicing and payments by project.

• WorkflowMax integration: Connect Xero to WorkflowMax for robust online project management. Manage projects, track job costs, log time and expenses, schedule tasks, collaborate with teams, and generate reports.

• Trello integration: Sync Xero projects with Trello boards to visualize workflows. Move cards across lists to update project status in real-time in both systems.

• Time and expense tracking: Capture billable time and itemized expenses for client projects. Create expense claims easily and assign to relevant projects.

• Project invoicing: Bill clients directly from projects. Invoice by project, phase, milestone or based on time and materials.

While Xero alone offers basic PM features, integrating with dedicated tools like WorkflowMax or Trello provides more advanced functionality for complex projects. But for simple project oversight, Xero provides the job costing and reporting you need to stay organized.

Can you set up projects in Xero?

To set up projects in Xero, follow these steps:

1. Open the Xero Projects app
2. From the Projects menu, click "New Project"
3. Select either "Draft" or "In Progress" as the project status
4. Click "Find or create a contact" and select an existing contact or add a new one (a contact is required)
5. Give the project a name

Once the project is created, you can add details like the project description, start and end dates, budget, tasks, and more. You can also connect the project to specific contacts, track time and expenses, create invoices, and generate reports.

Some key things you can do with Xero Projects:

• Track time spent on a project using timesheets
• Log expenses and attach receipts
• Invoice customers based on project milestones
• View profit and loss for a project
• See project status and details at a glance
• Integrate with other apps like Trello for task management

Using Xero Projects allows you to have all your project financials and details in one place alongside your broader accounting data. This makes it easy to see how your projects are performing and make sure they are on budget.

Can I integrate with Xero?

Xero offers an open API that allows developers to build custom integrations and apps that connect with Xero's accounting platform. This provides businesses the flexibility to add new features and automate workflows between Xero and other business systems.

If you have an idea for an integration that isn't already available in the Xero App Store, you can leverage the Xero API to build it yourself or work with a developer. Some key things to keep in mind:

• Xero has comprehensive documentation and SDKs available to make integration development easier. This includes code samples and tutorials in languages like .NET, Java, PHP and more.

• You'll need to register as an Xero partner to get API credentials for development and testing. Partners get additional support options too.

• Build and thoroughly test your integration before publishing it widely. You'll want to ensure seamless syncing of data between systems.

• Once complete, you can apply to sell your app in the Xero App Store. This gives it exposure to Xero's customer base. You set your own pricing and support plans.

The Xero platform makes it relatively straightforward to develop custom integrations to solve business problems. With some development effort upfront, you can expand Xero's capabilities and potentially reach new customers through the app marketplace. Reach out to their partner team if you'd like to learn more about the process.

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Xero Features for Effective Project Management

Xero provides several useful features to help businesses track project financials, time worked, and expenses. This enables greater visibility into the profitability of projects and where resources are being allocated.

Tracking Time and Expenses in Xero Projects

Xero's project tracking allows users to:

• Create expense claims for purchases related to a project and client. These can be marked billable or reimbursable.
• Log time worked on a project and assign it to specific clients and projects.
• Generate reports showing project expenses and billable time summaries.

This helps monitor project costs and ensure accurate client billing for time and expenses.

Generating a Project Summary Report for Financial Oversight

The Project Summary report compiles key financial data for each project including:

• Total time tracked against the project
• Expenses marked against the project
• Invoices raised against the project
• Payments received for project invoices

Reviewing this report allows assessing project profitability, unpaid invoices, and where time and money is being spent.

Leveraging WorkflowMax for Enhanced Project Tracking

For more advanced project management capabilities, Xero integrates with tools like WorkflowMax. Highlights include:

• Tracking project tasks, due dates, and status
• Managing project schedules and milestones
• Centralized document storage
• Customizable reports

While WorkflowMax handles core project organization, Xero pulls financial data in for integrated accounting and oversight.

Using Xero Projects alongside dedicated software provides robust accounting-to-project tracking for comprehensive cost and work management.

Setting Up Xero for Project Management

Configuring User Roles and Permissions for Project Management

Xero allows businesses to configure specific user roles and permissions to ensure efficient collaboration on projects. Some best practices include:

• Create a "Project Manager" role with access to key project features like tasks, time tracking, expenses, invoicing, and reporting. They need visibility into all aspects of projects they are managing.

• Create a "Project Accountant" role with access focused on the financial aspects like time and expenses tracking, invoicing, payments, budgets, and financial reporting at the project and organization level.

• For team members, create a "Project Team" role with limited access to enter hours worked on tasks, log expenses, collaborate on project activity, and view reports for their projects.

• Use Xero's detailed permissions settings to limit access to sensitive financial data or project details on a user and project basis based on internal information security policies.

Creating and Tracking Projects with Xero

Xero provides tools to set up projects, assign tasks, track progress, and monitor budgets:

• Create new projects and sub-projects using the Project section. Define start/end dates, contacts, budgets, tasks lists, and custom fields.

• Assign organization users to a project team and set their permissions. Assign specific tasks to users under the project.

• As work progresses, team members can log hours, expenses, invoice customers, and collaborate in real-time providing up-to-date visibility.

• Use Project Summary and Project Profit & Loss reports to monitor project health - hours logged, expenses incurred, invoices sent/paid, and budget status.

Automating Project Management Workflows in Xero

Xero integrates with various project management apps on the Xero App Store to streamline workflows:

• WorkflowMax for production scheduling, capacity planning, and manufacturing project management.

• Trello for agile-style kanban project collaboration with custom boards, lists, cards to track project tasks.

• Hubdoc for automated document collection, OCR, and attachment to projects.

• ApprovalMax for automated multi-step invoice approval workflows by project stakeholders.

Configure these apps to sync project data between systems and build automated processes like client onboarding, invoicing, reporting based on project milestones and events.

Advanced Project Management with Xero Integrations

Integrating Xero with other project management tools can significantly enhance functionality and provide more comprehensive oversight of projects. By connecting Xero to specialized software, businesses can build customized workflows to track projects, collaborate with teams, create detailed reports, and more.

Enhancing Xero with Trello for Project Collaboration

Trello is a popular project management tool focused on flexibility and collaboration. Integrating Trello with Xero creates a streamlined system to:

• Visually track project progress on kanban boards
• Assign tasks and deadlines to team members
• Set reminders and notifications
• Comment and discuss projects in real-time
• Sync Trello project data with Xero accounting

To connect them:

1. Install Trello's Xero integration from the Trello App Store
2. Authenticate with your Xero login credentials
3. Select which boards to sync

Once integrated, Trello cards can be linked directly to Xero invoices, bills, and other transactions. This makes it easy to track both project progress and financials in tandem.

The integration also automatically syncs contacts and updates project details between the two systems. This enhanced visibility enables seamless collaboration across teams.

Exploring the Xero App Store for Project Management Add-ons

The Xero App Store offers various third-party integrations to augment Xero's built-in project management and reporting functionality.

Popular add-ons include:

• WorkflowMax: Robust work management with features like task scheduling, timesheets, job costing, and custom reporting.
• Float: Streamlined resource planning and forecasting to track team capacity.
• Scoro: All-in-one software for projects, billing, quoting, and more.

These tools connect directly to Xero for real-time syncing of financial data. When assessing integrations, consider specific pain points like reporting, staff utilization tracking, or budget forecasting. Evaluate reviews and free trials to determine the best fit.

With the right add-ons, businesses can build a customized Xero-based system to optimize oversight, efficiency, and decision making across the project lifecycle. The Xero platform serves as the central financial hub while third-party apps address specialized needs. This flexible approach allows scaling project management as business needs evolve.

Tracking and Managing Project Financials in Xero

Tracking Job Costs and Staff Time with Xero

Xero provides robust tools for tracking all financial aspects of your projects. You can track detailed job costs by connecting Xero to apps like WorkflowMax, which allows you to:

• Create jobs and track associated costs
• Log staff time against specific jobs
• Analyze staff costs with Xero's Staff Time Overview report

For example, you can break a website development project into specific tasks like Design, Development, Testing etc. Your team can then track time spent on each task. This allows you to see where costs are being incurred and ensure accurate billing.

Streamlining Project Invoicing and Expense Tracking

With Xero projects you can create detailed invoices directly tied to specific jobs. Best practices include:

• Set up separate ledger accounts for each client or project
• Use the accounts for all invoicing, bill payments, and expense tracking
• Run project-specific financial reports in Xero for insights

You can also submit or approve expense claims for reimbursements and tie those to relevant projects. This simplifies administration so you can bill expenses directly to clients.

How to Create an Expense Claim and Assign it to a Project in Xero

Follow these steps to create an expense claim in Xero and assign it to a specific project:

1. Navigate to Expenses > Expense Claims > New Expense Claim
2. Enter details like company, date, claimant etc.
3. Select the project from the dropdown menu
4. Add expense line items, amounts, receipts etc.
5. Submit the claim for approval

Once approved, the expense claim will be tied to that project's financials. You can run project expense reports or include the claim total on project invoices.

Integrating expense claims with Xero projects enables you to accurately track project costs for efficient financial management.

Understanding Xero Pricing Plans for Project Management

Xero offers several pricing plans catering to businesses of different sizes and project management needs. When evaluating which Xero plan to choose, it's important to understand the project management features included at each tier.

Comparing Xero Pricing Plans for Project Management Features

The basic Xero plan starts at $9 per month and offers basic project tracking features like creating projects, tracking project time and expenses, and generating project reports.

The standard plan ($30 per month) builds on the basic features with the ability to track milestones, view project profitability, and compare project forecasts vs actuals. This is suitable for small businesses with straightforward project management needs.

For more advanced needs, the premium plan ($60 per month) enables budgeting at the project level, custom fields to track critical project details, and automated billing based on project stages. The premium plan can support larger and more complex projects.

The top-tier enterprise plan unlocks additional features like multiple currency support, custom roles and permissions, and advanced analytics. This caters to large businesses juggling many multifaceted projects.

Evaluating the Cost-Benefit of Upgrading for Advanced Project Management

When assessing whether to upgrade Xero plans for enhanced project management capabilities, weigh the direct cost of the upgrade against the potential benefits:

• Will upgraded features like custom fields, automated billing, and advanced reporting lead to greater efficiency, fewer errors, and more projects delivered on time and budget?
• Can upgraded plans help teams collaborate across multiple projects and reduce administrative tasks?
• Will features like budgeting, forecasting, and analytics provide greater visibility and control to minimize project risk?

For project-centric businesses, the productivity gains and risk reduction from advanced project management tools can justify the expense of premium Xero plans. The key is determining where a business' specific pain points lie, and matching those needs to the appropriate plan. For those relying heavily on projects for revenue, upgraded Xero plans can pay for themselves through improved project execution.

Conclusion: Maximizing Project Management with Xero

Recap of Key Benefits of Using Xero for Project Management

Xero provides several key benefits for basic project management needs:

• Financial visibility - Track project costs and profitability in real-time within the accounting software
• Time tracking - Log billable hours to specific projects
• Expense management - Create and assign expense claims to relevant projects
• Invoicing - Bill clients directly based on project deliverables
• Reporting - Generate project summary reports for insights into performance

While Xero lacks advanced functionality of dedicated PM tools, it can serve smaller teams looking for basic workflow management and financial oversight of projects within their accounting platform.

Strategic Next Steps for Implementing Xero in Project Management

Businesses interested in adopting Xero for project management should:

• Set up projects and connect them to specific clients in Xero
• Train staff on logging time and expenses to project codes
• Integrate Xero with Trello or WorkflowMax for added PM features
• Build project dashboards and customized reports
• Establish processes for using Xero data to inform resourcing decisions

With the right configuration tailored to your needs, Xero can provide an all-in-one system to manage company finances and oversee the progress of projects. The ecosystem of add-ons also allows you to scale up PM capabilities as your team and projects expand over time.

Related posts

• Using Xero for Agency Finances
• Using Xero for Construction Project Accounting
• How to Use Xero for Construction: Managing Project Finances
• Organizing Projects in Xero for Better Management