Yes, Xero can do job costing, up to a point. Xero Projects lets you set up a job, estimate it, record time and assign bills and expenses to it, invoice from it, and see profit against budget. Tracking categories give you a simpler way to split income and costs by job in your normal reports. For a business with a modest number of jobs, where the people doing the work record their time in Xero and most costs arrive as supplier bills, that is often enough. Where it stops is when the costs of a job live in other systems: labour in a separate timesheet or rostering app, materials in a stock or job management system, subcontractor claims in spreadsheets, and a month-end WIP report someone builds by hand. Then Xero shows part of the job, and the real job cost is somewhere else.
The problem in plain English
Underneath "can Xero do job costing?" is one question: did we make money on that job, and can we see it before it's finished? The answer depends less on Xero than on where the job's numbers start. If time, bills and invoices all pass through Xero, it can tell you a lot. If half of it starts somewhere else, Xero can only report what reaches it.
What Xero can do for job costing
Based on Xero's Australian website and help pages (checked October 2026). Xero changes plans and features from time to time, so confirm the details for your subscription.
Xero Projects
- Create a project for a customer, add tasks at an hourly rate or a fixed price, and set an estimate or budget.
- Record time with a timer or manual entry, from the desk or the mobile app, and set an hourly cost rate for staff so time carries a labour cost.
- Assign bills, spend money and expenses to a project, including estimated and actual expenses.
- Invoice from the project, either itemised or rolled into a single line, for fixed-price or time-and-materials work.
- See a profitability view of costs against budget and gross profit, plus project summary, detail and financials reports.
- Copy time recorded in Projects into an employee's payroll timesheet, if you also run Xero Payroll.
In Australia, project tracking is included in Xero's Ultimate plans for up to 10 users, with extra users charged per user per month. Xero's pricing page shows it as excluded from the Comprehensive plan.
Tracking categories
On any plan, you can tag invoice, bill and spend money lines with a job and run the profit and loss by job. There are no budgets or time, but job profit lands in the reports your accountant already uses. The catch is that only two tracking categories can be active at once, which we cover in what to do when two Xero tracking categories aren't enough.
Is it enough for you? Xero Projects is often a good fit if:
- your jobs are mostly time and supplier bills, rather than stock drawn from a warehouse;
- the people doing the work can record their time in Xero;
- you run a manageable number of jobs at once;
- you don't need a formal WIP report each month.
If that describes you, the cheapest fix is usually to use Projects properly before you buy anything else.
Where Xero job costing stops
Here is where growing businesses hit the edge. Several gaps are popular requests on Xero's own ideas board.
Labour from timesheets in other systems. Time can go from Projects into payroll timesheets, but not the other way. If your crews or staff clock on in a rostering or timesheet app, or payroll timesheets are your record of hours, those hours don't land on jobs by themselves. Xero's ideas board has a request to assign hours from a payroll timesheet to projects, and Xero's response in November 2025 was that it isn't currently on the roadmap. Labour cost in Projects also comes from the cost rate you set, not from what payroll actually paid once penalties, allowances and super are in.
Materials from stock or job systems. If materials are issued from a stock system, picked in a warehouse or ordered in a job management system, the cost of those materials sits in that system. Unless it's sent to the right job in Xero, the job looks more profitable than it is until a manual adjustment catches up.
Subcontractors and progress claims. Subcontractor claims, variations and retentions often live in spreadsheets or email. Billing a fixed-price task in stages is another gap: progressive billing for fixed-price tasks had 76 votes on Xero's ideas board when we checked.
Reporting by cost type. Owners and finance managers often want to see a job's costs split by account (labour, materials, subcontractors, plant). A request for project reports split by account code had 82 votes when we checked.
Contract or tender references. Many businesses need a contract, tender or purchase order number on every invoice for a job. The request for a project reference field that flows onto invoices had 107 votes, the most of the three.
WIP and month-end. Projects shows what's been tracked and invoiced, but we couldn't find a percentage-complete WIP report or a way to post WIP adjustments from Projects. Most businesses that need WIP still build it in a spreadsheet, using numbers pulled from Xero and from the job system.
Many jobs at once. Tracking categories get unwieldy as the option list grows, and job, branch and division compete for two slots. Projects copes better, but someone still assigns every bill line.
None of these is a reason to leave Xero. They mean the job's costs are spread across systems, the problem we describe in can't see job profit until it's too late.
A quick word on MYOB
MYOB Business uses "jobs" rather than projects. You can assign a job to each line of a transaction, including an employee's pay, set job budgets and run a Job Profit & Loss report. That helps with labour, but the same limits apply once costs start in another system. If you use MYOB Exo or MYOB Acumatica (Advanced), ask your MYOB partner which job costing or project features your edition and licence include before you add anything.
Your options, simplest first
Start at the top; plenty of businesses stop at step two or three.
- Use Xero Projects properly. Set up every job as a project, with an estimate. Set staff cost rates, and review them when pay rates change. Make "assign it to a project" part of entering every bill, and check unassigned costs weekly, not at the end of the job.
- Use tracking categories consistently. If Projects is more than you need, tag every income and cost line with the job. Set defaults on supplier contacts where you can, and check the "unassigned" total at month-end.
- Add a job costing or job management app. If your work needs quoting, scheduling, materials and progress claims, a job system that connects to Xero may be the right step. Check exactly what its Xero connection sends (invoices only, or bills and costs too) before you commit.
- Connect the job system to Xero properly. When labour, materials and subcontractor costs live in different systems, the reliable fix is to agree how a job's numbers should flow, capture each cost once, and connect the systems so every cost reaches the right job. The job cost report then comes from one place instead of a spreadsheet.
Costs vary widely depending on the size of the business, how many systems are involved and how much needs to be custom-built, so we scope every project first and give you a fixed quote after a free initial chat.
For a deeper look at whether your job numbers are tracked or estimated, see job costing: are you tracking or just guessing?.
How a proper connection works
For whoever looks after your systems: Xero has an API for projects, invoices, bills and tracking categories. A connection gives each job one code that every system uses, sends approved hours, issued materials and subcontractor claims to the right job and cost type, and copies job, cost and invoice data to a reporting database for budget against actual and WIP. The design choices that matter are which system owns the job list, what happens when a cost arrives for a job that doesn't exist yet, and how corrections are handled after month-end. Failed records should go to a person, not be skipped quietly. See our Xero API integration service for how we approach this, and the Xero and MYOB integration guide for related reading.
When it's worth getting help
If you have tried Projects or tracking categories and the job cost report still needs a spreadsheet, or nobody agrees which system holds the true job cost, the problem is usually in how the work flows between people and systems rather than in Xero itself. Our Process & Systems Audit ($5,000) maps how your jobs move from quote to final invoice and where the costs get lost, and gives you a written report on what to fix first, whether that's a setting, a process change or a connection.
Frequently asked questions
Does Xero do job costing?
Yes. Xero Projects tracks time, expenses and invoices against a job and shows profit against budget. Tracking categories can also split income and costs by job in the profit and loss. It works best when most of a job's costs are entered in Xero.
Can Xero track labour costs on jobs?
Partly. Time recorded in Projects carries the staff cost rate you set, and it can be copied into payroll timesheets. Hours that start in payroll timesheets or a separate rostering app don't flow onto projects by themselves.
Can Xero do WIP reporting?
Not as a standard report. Projects shows tracked and invoiced amounts, but we couldn't find a percentage-complete WIP report or WIP journals in Projects. Most businesses build WIP in a spreadsheet or a reporting tool.
Is Xero or MYOB better for job costing?
Both handle basic job costing. MYOB Business lets you code pay lines to jobs, which helps with labour. Xero Projects is stronger on time tracking and project invoicing. Once costs start in other systems, the bigger question is how those systems connect, not which ledger you use.
If your job costs are spread across Xero, timesheets, a stock system and spreadsheets, book a free initial chat. We'll tell you plainly whether Projects set up properly will do, or whether connecting your systems is worth it.