Setting up expense categories in Xero and tracking expenses efficiently is crucial for accurate financial management. Here’s a step-by-step guide on Xero expense management: 

 

1. Set Up Expense Categories

To organize expenses, start by creating categories: 

  • Log into Xero and navigate to the dashboard. 
  • Click on Accounting in the left menu, then select Chart of Accounts. 
  • Click Add Account to create new Xero expense categories. 
  • Choose Expense as the account type, enter the account name, and save to add the category. 

 

2. Add Expenses Manually

For manual expense entries: 

  • Go to Business > Bills to Pay. 
  • Click New, then select either Bill or Spend Money, depending on the nature of the expense. 
  • Enter the supplier, amount, and assign the appropriate expense category from your Chart of Accounts. 
  • Click Save or Approve to record the expense. 

 

3. Add Expenses via Mobile App

For on-the-go tracking, use the Xero mobile app: 

  • Open the app, go to Add Expense, and enter expense details. 
  • Attach any relevant receipts or images, then click Save to log the expense. 

 

4. Track and Categorize Expenses

Once set up, Xero will categorize expenses automatically: 

  • Expenses will be tracked based on the categories you’ve created. 
  • View categorized expenses in expense reports or by category to monitor spending. 

 

5. Generate Expense Reports

For a detailed overview of expenses: 

  • Go to Reports > Accounting to access expense reports in Xero. 
  • Select the desired date range and customize the report to analyze expenses.