Managing Products and Services in Xero

Step-by-step guide to managing products and services in Xero (often called Inventory Items)

1. Access Products & Services

   • Go to Business > Products and services.
   • This is where you manage all items you sell or purchase.

2. Add a New Product or Service

   • Click New Item.
   • Enter:
     • Item code (optional but useful for tracking, e.g., PROD-1001).
     • Item name/description (what you sell or buy).
     • Tick whether you Buy this item, Sell this item, or both.

3. Set up Selling Details

   • If “Sell this item” is ticked:
     • Add a sales description (appears on invoices).
     • Enter default sales price (can override per invoice).
     • Select default income account (e.g., Sales, Services Income).
     • Choose tax rate (e.g., GST, VAT, or No Tax).

4. Set up Purchasing Details

   • If “Buy this item” is ticked:
     • Add a purchase description (appears on bills).
     • Enter default purchase cost (can override per bill).
     • Select default expense or COGS account.
     • Choose tax rate.

5. Track Inventory (Optional)

   • Tick “I track this item” if you want Xero to track stock levels.
   • You’ll need to enter:
     • Inventory asset account (Balance Sheet).
     • COGS account (Profit & Loss).
     • Quantity on hand and unit cost (if migrating from another system).

6. Import Products & Services in Bulk

   • Go to Products and services > Import.
   • Download Xero’s CSV template.
   • Fill in codes, names, prices, accounts, and tax rates.
   • Upload the file.

7. Manage & Update Items

   • Edit products/services anytime to change prices, descriptions, or linked accounts.
   • Archive items no longer in use (they remain on past invoices/bills).

8. Reporting & Analysis

   • Run Inventory Item Details Report to see quantities, values, and transactions.
   • Use Sales by Item report to track revenue from each product/service.
   • Use Purchases by Item to analyze supplier costs.

In Xero, Products and Services (sometimes called Inventory Items) go beyond just storing item names and prices. The advanced features help automate sales, purchasing, reporting, and even inventory control. Here’s the full breakdown:

Advanced Features of Managing Products & Services in Xero

Inventory Tracking (Stock Control)

• Track stock quantities, costs, and values in real time.
• Xero auto-updates inventory when items are bought (via bills) or sold (via invoices).
• Calculates COGS (Cost of Goods Sold) automatically.

Non-Tracked Items

• Set up non-tracked products/services (e.g., consulting hours, subscriptions).
• Simplifies invoicing while still capturing revenue streams.

Default Accounts for Each Item

• Link items to specific sales, expense, and inventory accounts.
• Example: “Product A” → Sales Revenue (400), COGS (500), Inventory (120).
• Ensures automatic, accurate coding on invoices and bills.

Multi-Currency Pricing

• Assign selling and purchase prices in different currencies.
• Great for businesses sourcing internationally and selling globally.

Custom Pricing & Discounts

• Set standard selling prices but override per customer or invoice.
• Apply bulk discounts or promotional pricing easily.

Product Codes & Descriptions

• Assign unique codes/SKUs for quick search.
• Add detailed descriptions (even multiple lines).
• Saves time when creating invoices and bills.

Bundling & Composite Items (via Add-ons)

• Use integrations (e.g., DEAR, Cin7, Unleashed) to bundle products.
• Sell one item (e.g., a kit or package), while Xero tracks multiple underlying components.

Batch & Expiry Tracking (via Add-ons)

• Track lot numbers, batch codes, and expiry dates (e.g., for food, pharma).
• Works with advanced inventory add-ons connected to Xero.

Integration with Sales & Purchasing Workflows

• Items flow into quotes, invoices, bills, and purchase orders.
• Automates pricing, accounts, and tax coding.

Reporting & Analytics

• Run reports like:
  • Inventory Item Summary (quantities, values, margins).
  • Sales by Item (best sellers, revenue drivers).
  • Purchases by Item (supplier dependency, cost tracking).
• Helps optimize stock levels and pricing strategy.

Attachments & Documentation

• Attach product manuals, supplier agreements, or warranty docs to items.
• Keeps product-specific info in one place.

Tracking Categories Integration

• Allocate products/services to departments, projects, or regions.
• Run profitability by product line or business segment.

Bulk Import & Export

• Import large product catalogs via CSV.
• Update prices or codes in bulk.
• Export for syncing with eCommerce platforms or external systems.

API & eCommerce Integration

• Sync with Shopify, WooCommerce, Amazon, or POS systems.
• Sales automatically create invoices and update inventory in Xero.

Tip: The real power comes from combining tracked items + default accounts + integrations — this ensures that every sale or purchase auto-updates financials, inventory, and reporting without manual entry.