The introduction of Xero Projects came with great excitement as job costing was one of the most awaited features in Xero. In Xero’s feature request area, Job Costing is high up there at fifth place out of all requested features.
Both when looking by vote:
And by number of replies:
If you want to use Xero Projects in your own business or recommend it to your clients there are six things you should know first.
1. Xero Projects is in beta
Xero Projects should have come with a warning – it is still very much in beta. It looks like it is a separate creature ‘sawn’ into Xero. Some major missing pieces are:
- When you create an invoice from a project there is no link back from the invoice or any indication that it is related to a project.
- When you record an expense in a project it doesn’t create a bill or a spend money transaction in Xero.
- You can’t link existing invoices and bills to projects, or add expenses from Receipt Bank.
Staff costs and timesheets also aren’t integrated. Xero support says the invoice and bank rec integration will be released next month. In the meantime, I would recommend Xero projects only to clients who need a simple method to record hours and invoice for them.
2. Xero Projects is the missing piece against MYOB
Job costing in Xero is fantastic for those who have been waiting to move from MYOB AccountRight. Xero has gradually added payroll, quoting, purchase ordering, multiple email addresses on a contact, and of course, inventory.
Job costing is traditionally seen as an essential component of an accounting system and was missing in Xero. Once Xero fixes up the bugs and integrations in Xero Projects it can tick off all the boxes in a comparison against MYOB AccountRight.
3. Xero Projects is not similar to job costing in MYOB
Surprisingly, Xero did not implement job costing as an extra attribute on a transaction line. We all expected projects to be similar to tracking categories in Xero. Tracking categories is a value that you can assign to invoice lines, bill lines, bank transaction lines and journals. But Xero chose to implement Projects in a different way.
Xero Projects operates similarly to Workflow Max. The Projects module tracks time and expenses and a billing process generates invoices. It is possibly a more sophisticated method as you can add more complex project management features. But at these early stages it is hard to tell how far Xero will take this.
4. Xero Projects is not a project management solution
Xero Projects will probably never become a full project management solution. That would require planning and scheduling, client collaboration, document management, and customisable alerts and notifications.
We’ve learned that Xero like to focus on the accounting aspect of things, not necessarily the operational side of running your business. However, I am sure that as soon as the APIs are released, plenty of integrations to existing project management tools will become available.
5. Xero Projects is a good replacement for spreadsheets
Xero Projects seems like a good solution for businesses that are not using anything except spreadsheets to track project profitability.
These businesses will benefit hugely from having a single dashboard showing all projects, their progress, and never forgetting to invoice for a project. It lets them create a project, record time and expenses, and bill for time and material or by fixed price.
6. Xero Projects can’t handle serious job tracking
Watertight project management prevents leakage, such as failing to charge supplier invoices to a client. It also includes bulk billing clients or attributing a supplier invoice to multiple jobs. If you need these then you will find Xero Projects somewhat frustrating. It is better to stay with Workflowmax or one of its equivalents.