Xero Data Setup Suggestions

Below are some general guidelines on how to setup Xero for an architectural, engineering or construction firm with the intention of integrating it with Sage Construction Management. A PDF Download is also available which includes similar instructions.

Xero Data Setup Suggestions and AccountingLink Overview


Contact Management - Customers, Suppliers and Employees

Since Sage Construction Management can import Customers, Suppliers and Employees from Xero, it is generally a good practice to review each list in regards to their status. For example, if a supplier is no longer used then it should be marked inactive in the system before syncing with Sage Construction Management.


Projects

Newly awarded customers and projects should be setup in Sage Construction Management then the customer referenced on the Prime Contract will be exported to Xero. Thus, a company will gradually transition to running all projects in Sage Construction Management but this may take time depending on the average length of each job.


Recommended Chart of Accounts


Type of Account Account Description Comment
Bank Checking Account  
Current Asset Accounts Receivable  
Retentions/Holdback Receivable This account should be created if Prime Contract Invoices Retainage (ie Holdbacks) will be tracked in the accounting system.
Current Liability Accounts Payable  
Retentions/Holdback Payable This account should be created if Sub Invoices Retainage (ie Holdbacks) will be tracked in the accounting system.
Credit Card Payable Potentially, there could be multiple credit card payable accounts: one for each type of card (ex. Visa, Mastercard, AMEX, Home Depot etc).
Sales Tax Payable Current Liability Potentially, there could be multiple sales tax payable accounts such is in the case for each region in Canada (ex. GST, PST, HST).
Revenue Construction Income Cost Code Service Items would reference this account for the purpose of exporting Prime Contract Invoices.
Direct Costs Construction Expense Cost Code Service Items would reference this account for the purpose of exporting Bills, Sub Invoices and Employee Misc. Expenses. Alternative to this account would be expense accounts for each resource: materials, labor, equipment, sub, and other.

Untracked Inventory Items - For Cost Codes

A general rule for contractors to follow is to have a master list of cost codes for categorizing work. These standard cost codes would be used by estimating, project management and accounting staff so information can flow easily between departments.

In Sage Construction Management, you can import industry standard cost codes such as CSI 2012 or a custom list from Microsoft Excel. To facilitate integration between Sage Construction Management and Xero, these cost codes would be entered as Untracked Inventory Items and reference an expense and income chart of account as shown in the image below. Rules can then be established in the AccountingLink Sync Preferences area to determine how items should be referenced.




Importing Industry Standard Classification Systems

  • Click here for options and instructions.

Tracking Expenses By Cost Code and Resource Type (Material, Labor, Equipment, Sub, and Other)

Untracked Inventory Items in Xero do NOT need to have a resource identifier (ie Material, Labor, Equipment, Sub, and Other) since Sage Construction Management will track financials by job cost code and resource type. Thus, in the example below cost code 02000 or 03000 would be the only item needed if construction expenses and income will be tracked by type of work.

Example Untracked Inventory Item with Resource Identifier:

  • 02000 Sitework
    • 02000-M Sitework Materials
    • 02000-L Sitework Labor
    • 02000-E Sitework Equipment
    • 02000-S Sitework Sub
  • 03000 Concrete
    • 03000-M Concrete Materials
    • 03000-L Concrete Labor
    • 03000-E Concrete Equipment
    • 03000-S Concrete Sub

Untracked Inventory Item - For Missing Cost Code in Xero

If a master cost code structure will be setup in Sage Construction Management and Xero, the AccountingLink needs to have a "backup" item just in case the Sage Construction Management project cost code does not exist in the accounting system. In addition, this untracked inventory item needs to be set as the Default Item for AP and AR within the Sync Preferences form. See image below for more details.

Item Name:   CCUnc: Sage Construction Management Unclassified
AP Account Reference:   Construction Expense
AR Account Reference:   Construction Income



Untracked Inventory Item - For Retainage (ie Holdback) Tracking

Applicable if Retainage (ie Holdbacks) for Sub Invoice and Prime Contract Invoices will be tracked in Xero.

Item Name:   Retention: Retention Tracking
AP Account Reference:   Retentions Payable
AR Account Reference:   Retentions Receivable

Click here for more details.