Xero configuration

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.

Because Sage Construction Management can import customers, suppliers, and employees from Xero, it's best practice to review each list and confirm the status of each record. For example, suppliers that are no longer used must be marked as inactive in Xero before syncing with Sage Construction Management.

Set up newly awarded customers and projects in Sage Construction Management. The customer referenced on the prime contract can then be exported to Xero. Over time, the company will gradually transition to managing all projects in Sage Construction Management, although the pace of this transition will depend on the average duration of each project.

Xero does not support jobs or sub-customers as separate entities. While project numbers can be included during export, they're displayed in Xero only in the Reference field and are not tracked or reported as jobs within Xero.
Type of account Account description Comment
Bank Checking account  
Current Asset Accounts receivable  
Retainage/holdback receivable This account must be created if prime contract invoice retainage (holdbacks) will be tracked in the accounting system.
Current Liability Accounts payable  
Retainage/holdback payable This account must be created if sub invoice retainage (holdbacks) will be tracked in the accounting system.
Credit card payable There might be multiple credit card payable accounts, one for each type of card. For example, Visa, Mastercard, AMEX, Home Depot, and so on.
Sales Tax Payable Current liability There might be multiple sales tax payable accounts, such as for each region in Canada (GST, PST, HST).
Revenue Construction income Cost code service items will reference this account when exporting prime contract invoices.
Direct Costs Construction expense Cost code service items will reference this account when exporting bills, sub invoices, and employee miscellaneous expenses. Alternatively, you can use separate expense accounts for each resource type, such as materials, labor, equipment, sub, and other.

The core principle of job costing is to maintain a primary list of cost codes to categorize work consistently. These standard cost codes will be used across estimating, project management, and accounting teams to ensure smooth and accurate information flow between departments.

In Sage Construction Management, you can import industry standard cost codes such as CSI 2016 or a custom list from Microsoft Excel. To support integration between Sage Construction Management and Xero, enter cost codes as untracked inventory items and reference an expense and income chart of accounts. Then, configure the AccountingLink Sync Preferences, to control how these items are mapped and synchronized during the export process.

For each item in Xero, specify the following fields:

  • Code

    Enter the cost code.

  • Name

    Enter the cost code description.

  • Track inventory item

    Leave this checkbox unchecked.

  • Purchase settings

    • Select the Purchase checkbox.

    • Select the appropriate expense or Cost of Goods Sold account from the Purchase account dropdown.

    • Enter the cost code description in the Description field.

  • Sales settings

    • Select the Sell checkbox.

    • Select the appropriate income account from the Sales account dropdown.

    • Enter the cost code description in the Description field.

Learn more about importing CSI or NAHB codes into Xero.

Untracked inventory items in Xero do not need to have a resource identifier, such as material, labor, equipment, sub, or other. Sage Construction Management tracks financials by job cost code and resource type. As illustrated in the example below, the cost code 02000 or 03000 alone might be sufficient when construction-related expenses and income are categorized by type of work.

For example:

  • 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

If Sage Construction Management and Xero use a primary cost code structure, the AccountingLink must include a backup item for cases where a Sage Construction Management project cost code does not exist in Xero. This item must also be set as the default item for both Accounts Payable and Accounts Receivable in the Sync Preferences.

  • Code: CCUnc

  • Name: Sage Construction Management Unclassified

  • Purchase settings:

    • Purchase account: Expense account

    • Description: Sage Construction Management Unclassified

  • Sale settings:

    • Sales account: Income account

    • Description: Sage Construction Management Unclassified

Applies when retainage (holdbacks) for sub invoices and prime contract invoices is tracked in Xero.

  • Code: Retention

  • Name: Retention Tracking

  • Purchase settings:

    • Purchase account: Retentions payable

    • Description: Retention Tracking

  • Sale settings:

    • Sales account: Retentions receivable

    • Description: Retention Tracking

Learn more about tracking retainage in Xero.

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Posted February 21, 2026 © 2026 The Sage Group plc or its affiliates ("Sage") or its licensors. All trademarks mentioned are the property of their respective owners. Use of non-Sage trademarks is not an endorsement of any person or product.