What is a Xero tracking category?
A Xero tracking category is a label added to transactions so that Xero's reports can be grouped by a part of the business, such as a branch or a partner. Each category holds a list of options, such as one option per branch. You choose an option on the invoice line, or a contact's sales defaults can fill it in on new invoices.
Xero allows four tracking categories in total, with two active at a time. Reports such as Aged Receivables and Tracking Summary can be grouped by a category. A tracking category does not change how Xero sends invoice reminders, statements or late fees, because those read the invoice's due date and amount, not its tracking option.
For collections, the usual step is to mirror each segment as a Xero contact group, which connected apps can read, and keep the tracking category for reporting. Paidnice can also filter a late fee policy by tracking category directly. The full steps are in whether Xero tracking categories can drive different invoice reminders and late fees.
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