Xero for Architects: Setting Up a UK Practice
A practical set-up for the accounting system most small UK practices use, and an honest look at where it stops.
Xero is the accounting system of choice for many small and mid-sized UK practices. This guide covers a sensible set-up for an architecture practice, what Xero Projects can and cannot do with stage-based fees, and when to pair Xero with practice management software.
Xero is strongest as the ledger. Stage fees, timesheets and resourcing usually need a project layer on top.
Why so many UK practices use Xero
Xero is cloud accounting software that handles invoicing, bank reconciliation, bills, VAT returns and reporting. For a small or mid-sized architecture practice it is usually the system of record for money, while projects, fees and timesheets are run somewhere else.
Practices choose Xero because accountants know it, bank feeds make reconciliation quick and its app marketplace connects it to most practice management tools. Xero's UK pricing page lists submitting VAT returns to HMRC on every plan.
This guide is general set-up guidance. Your accountant should confirm the chart of accounts, VAT scheme and treatment of items such as retentions and disbursements for your practice.
The core set-up for an architecture practice
A good Xero set-up for a practice is simple: a short chart of accounts that separates fee income from recharged expenses, tracking categories for the two splits directors care about and invoice templates that carry the project and stage.
Set Xero up in this order
- Organisation and VAT: Enter the practice details, VAT number, VAT scheme and VAT period, and connect to HMRC for returns.
- Bank feeds: Connect every operating account and the credit cards so reconciliation starts from the bank.
- Chart of accounts: Keep fee income, recharged expenses and sub-consultant costs on separate lines.
- Tracking categories: Add the two splits you want in every report, such as studio and sector.
- Invoice templates: Set branding themes with payment terms, bank details and space for project and stage references.
- Contacts: Load clients with their payment terms and the right contact for invoices.
- Integrations: Connect payroll, expenses and your practice management software last, once the structure is stable.
Chart of accounts basics
Xero's default chart works for most practices with a few additions. Split income into fee income and recharged expenses, so fee turnover is not inflated by printing and travel passed to clients. Give sub-consultant fees you pay and recharge their own cost line. Keep salaries, employer National Insurance and pensions separate, because they drive your cost rates. Resist adding an account per project: that is the job of tracking or project software.
Tracking categories
Tracking categories tag transactions so reports can be split without extra accounts. Xero allows two active tracking categories, so choose them carefully. Common choices for a practice are studio or office, and sector or project type such as residential, education and commercial. Avoid using a tracking category for individual projects: the option list grows quickly, and project-level reporting is better handled by a project system that knows stages and hours.
What Xero Projects does, and where it stops
Xero Projects tracks time and costs against jobs, creates quotes and invoices from them and reports project profitability. It works well for simple jobs, but its task model does not map neatly onto RIBA stages with fixed fees billed in instalments.
Xero describes Projects as letting businesses add tasks and expenses to a project, track time with a timer, create fixed price or time-and-materials invoices and see profitability in a Project Summary report. On Xero's current UK pricing page, project tracking is included in the Ultimate plan for up to 10 users, with additional users charged per month. Check current plans on Xero's site, as packaging changes.
Stage 4 set up as one fixed price task · £40,000
- 01 Invoicing the task bills the full fixed amount at once.
- 02 Monthly instalments need the stage split into artificial tasks.
- 03 Rates sit on the task, so different roles need duplicate tasks.
Project system: Stage 4 fee £40,000 with an hours budget. Billing: monthly by percentage complete. Time: coded by person and role. Xero: receives the invoice and payment.
Xero Projects can hold a stage as a task. A project layer can hold it as a fee with a budget, billed in parts and synced to Xero. Example is illustrative.
The limits practices run into
Two gaps come up repeatedly on Xero's own product ideas forum. First, a fixed price task is billed in full when it is invoiced; requests for progressive billing of fixed price tasks are marked as gaining support but not delivered. Users describe working around it by splitting a stage into tasks such as "Stage 4 month 1". Second, charge-out rates are set per task, not per person, so billing the same task at different rates for a director and a Part 2 means duplicating tasks. Neither is a fault in Xero as an accounting system. They are signs that stage-based professional fees need a model Xero Projects was not built around.
When to pair Xero with practice management software
Pair Xero with practice management software once the practice needs fees by stage, hours budgets, resourcing or WIP reporting. At that point Xero stays the ledger and the practice software becomes the place projects are run.
- 01
Xero alone
Invoices raised by hand, fees tracked in a spreadsheet.
- Suits
- Sole practitioners and very small studios with few live jobs
- Watch
- No view of fee used against progress
- 02
Xero with Xero Projects
Time and costs tracked against jobs inside Xero.
- Suits
- Simple time charge or one-off fixed fee work
- Watch
- Stage instalments, role rates, resourcing
- 03
Xero with practice software
Stages, timesheets and billing run outside, synced to Xero.
- Suits
- Practices billing by RIBA stage with several live projects
- Watch
- What syncs, in which direction, and who owns each record
Xero remains the accounting record in every option. The question is where stages, hours and fees are managed.
- Decide who owns each record.Invoices usually start in the practice software and post to Xero. Payments and bank reconciliation stay in Xero.
- Match the client list.Clean duplicate contacts in Xero before connecting, or they multiply.
- Agree account codes once.Map fee income, recharged expenses and VAT rates so every synced invoice lands in the right place.
- Reconcile monthly.Check that invoiced fees in the project system match fee income in Xero before closing the month.
Most dedicated tools list Xero integrations, including Monograph, Total Synergy, Fresh Projects and Projectworks. Ask each vendor exactly what syncs: invoices only, or contacts, payments and expenses too. Our buyer's guide to project management software covers the wider comparison.
A month-end routine that keeps Xero useful
The set-up only pays off if the books are current. A short month-end routine keeps Xero reliable enough for directors to make decisions from.
- All bank accounts and cards reconciled to the last day of the month.
- Every completed stage invoiced, with no approved time left unbilled.
- Sub-consultant and supplier bills entered, with recharges marked.
- Aged receivables reviewed and overdue invoices chased.
- Fee income in Xero matched to invoiced fees in the project system.
- Cash forecast rolled forward from the reconciled balance.
For the forecast itself, see cash flow forecasting for architecture practices.
Questions practices ask
Short answers to the Xero questions UK practices ask most often.
Is Xero good for architects?
Xero is a strong accounting system for small and mid-sized UK practices, with bank feeds, VAT returns to HMRC and a large app marketplace. It is not designed to manage RIBA stages, hours budgets or resourcing, so most practices that bill by stage pair it with practice management software.
Can Xero Projects handle RIBA stage fees?
Partly. A stage can be set up as a fixed price task, but Xero's product ideas forum shows that fixed price tasks are billed in full when invoiced, so monthly instalments need workarounds. Rates are also set per task rather than per person.
Which Xero plan includes Projects?
On Xero's UK pricing page as of October 2026, project tracking is included in the Ultimate plan for up to 10 users, with extra users charged monthly. Plans change, so check Xero's current pricing before buying.
How should architects use Xero tracking categories?
Use them for the two splits you want in every report, such as studio and sector. Xero allows two active tracking categories, so avoid using one for individual projects and handle project reporting in a project system instead.
What practice management software integrates with Xero?
Monograph, Total Synergy, Fresh Projects, Projectworks and Avoice all offer Xero integrations. Check what each one syncs and in which direction before choosing.
Where Avoice fits
Avoice runs the project side, stages, fees, timesheets and invoicing, and syncs with Xero, so the practice keeps Xero as its ledger without forcing stage fees into Xero Projects.
Each Avoice project carries its RIBA stages, a fee per stage and an invoicing schedule. Approved timesheets roll up against each stage and turn into invoices in one click, which sync to Xero. In financials and cash flow, a data-status strip shows which months are Verified, Provisional or Open against Xero, alongside fees invoiced, WIP, margin and the cash forecast. Expense claims are approved in Avoice too. QuickBooks is supported for practices that use it instead.
To see a live project syncing with your Xero organisation, book a demo.