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This is now the 4th most popular non-rejected idea in all categories.

Reposting my idea that was attached to this one for visibility:

Transaction Tagging System.

Instead of the simplistic Tracking Categories which only allows a two categories to be applied to a transaction, Xero should have a tagging system, where custom tags can be applied to any transaction in any quantity.

This system could replace Tracking Categories by using a format like "Location:HQ", "Location:Branch", and have custom tags like
"SDE" (Shareholder Discretionary Earnings)
"PST:Reimburse" (for taxes that can be refunded from the government at the end of the year)
"Review Needed"
"Approval Needed"
"Accountant Review"
"Needs Receipt"
"Re-categorize"
"Submit to X Grant Program"
"Expense to Client Y"

Bonus points ff the tags can be applied to any object in Xero - Invoices, Transactions, Customers, Files, etc.

This system could also be used to kick-off automation in other systems through the API connection.

Apply a tag of "print in HQ", and a receipt for the transaction gets printed in an office.

"Invoice Client", and the transaction is added as an expense to the next invoice that gets sent to the client.

"Needs Approval" and an email fires to the approver with a link to the transaction

We are currently making extensive use of Xero’s tracking categories to manage and analyze our business activities. However, the existing limit on the number of tracking categories is proving restrictive for our operations.

To better align with our reporting needs and ensure more accurate financial insights, we kindly request that the cap on tracking categories be increased from the current limit to unlimited. This adjustment would allow us to fully leverage Xero’s functionality without constraints, ensuring that our reporting remains flexible and comprehensive as our business grows.

We believe this enhancement would not only benefit our organization but also add significant value for other Xero users who require more detailed tracking.

Totally needs to happen!

It’s difficult to understand why Xero’s tracking categories remain limited to only two dimensions, particularly when more complex tracking is a common requirement for organisations like ours.
We manage housing across multiple properties and require multi-level tracking (3-4 levels) to accurately report on and manage our portfolio. The current feature does not meet our needs or replicate the functionality available in other accounting systems, which support multi-level class structures.
Without the ability to implement nested or additional tracking levels, we are unable to transition to Xero, as it would significantly limit our reporting capability and operational oversight.
This limitation is a key barrier for organisations with more complex structures and highlights the need for more enhanced tracking capabilities.

Having worked with proper ERP systems, it’s hard to understand why Xero limits users to just two tracking categories. In practice, that’s nowhere near enough if you want to do any meaningful analysis or drill into your data properly. Most organisations need to look at transactions across multiple dimensions (e.g. department, activity, funding source), and two categories just doesn’t cut it. It’s also confusing that you can create additional tracking categories, but can’t actually use them without archiving existing ones. If the system supports more, it would make sense to let users actually use them. This feels like an unnecessary limitation that makes reporting harder than it needs to be.

Absolutely critical, thanks Nuno

Xero is attempting to compete with established ERP systems. MS D365 Business Central has 8 dimensions, Infor LN has capacity for 12 dimensions. When I recommended moving a NFP from MS D365 BC to Xero, particularly to reduce software costs, a key criticism was the limited number of dimensions. Because of this, Xero was deemed an inadequate tool for data analysis.

The other thing I'd add: why can't we import tracking category options? (eg a list of project numbers, agent names).

This is critical for my client base, we need four dimensions - it frustrates me daily that Xero can have up to four tracking categories but only 2 can be active, I mean what is the point of 2 inactive ones? Please sort this ASAP.

My clients are charities and we need Fund Type/Cost Centre/Department/Project Code as a minimum.

The Projects Module does not work for charities as they do not run projects on a time and materials basis so this is overkill/too expensive for them.

Could you get on with it please? :-)

A must feature!

Hi this is a must feature in the construction industry with more than 1 office or studio could this please be added as an urgent feature.

A must have feature in the Contruction industry

Having 3 levels will certainly assist

Nice.....thanks for this https://atdoorstep.ae/dubai/handyman

having just started in a charity that needs more than 2 tracking categories, I have seen that they are resorting to changing their chart of accounts instead. Would have been a lot easier to use all 4 (or at least 3).

It doesn't appear that Xero aren't reading these comments but it's clear so many of our businesses, across many different industries, desperately require more tracking categories.
It may be best to keep logging support calls to Xero. The more we contact them about this issue, the more likely they may start to understand how critical it is that additional tracking categories are made available asap. The 2 active categories (4 total categories) is not sufficient.

Hello! We need more tracking options - 2 categories are okay for us atm but more importantly we need more than 100 options as we do 50 jobs/ month and need to view at least about 200 entries in one category.

Please help!!!

Thank you.

A limit of 2 tracking categories is not sufficient for efficient Management Account reporting - Ok for a sole trader or small business with simply operations. To be competitive you need to match tracking availability with other software providers. This is a huge downfall of Xero. I am having to generate a larger chart of accounts to accommodate the Cost Centres and Departments for reporting

employee category should at least be separate to income categories

This is the 10th most popular non-rejected idea right now in all categories.

How many votes do you require to proceed with this?

Additional tracking will certainly benefit our business.