Construction profit slips when numbers change between estimating, budgeting, and purchasing. The fix is a straight-through flow: build the estimate once, convert it to a budget with cost codes, raise POs from that budget, and push only approved, fully coded invoices to Xero.
This article shows what lives in Xero, where project-side tools help, and how contractors keep a single source of truth from bid to final account.
What Xero covers (and what it doesn’t)
Xero is your accounting source of truth—bills, approvals, payments, reporting—and it has featyres that speak to quoting/estimating for construction and contractors. Xero highlights include creating and sending quotes/estimates, plus the wider accounting features and mobile access. It’s helpful for small teams, but it’s not a full, estimating-to-purchasing workflow on its own.
What’s missing for most contractors is the project-side glue: a structured cost library, estimate-to-budget conversion, cost codes mapped to projects, and raising POs directly off the agreed budget — so AP checks line items against commitments before anything posts to the ledger. That’s where a construction tool that integrates with Xero fits.
The ideal construction flow (no retyping)
- Estimate with a cost library and markups. Reuse previous jobs; export client-ready PDFs when needed.
- Convert to budget in one click. Your cost breakdown becomes live budget lines and cost codes.
- Raise POs/subcontracts from the budget. Quantities and rates come from the estimate, so commitments match what you priced.
- Match invoices to POs and valuations; route approvals. Only lines with correct quantities and rates move forward.
- Publish a single bill to Xero with supplier, GL account, tracking tags, tax, and the PDF attached—no duplicate entry.
Options to connect estimating to budget to POs in Xero
Option A — Spreadsheets + Xero
- How it works: Estimate in Excel, manually key a budget in a sheet, raise POs by email, and type invoice lines into Xero.
- Upside: Familiar and cheap.
- Risk: Numbers drift (rates and quantities), weak audit trail, and retyping causes errors.
Option B — Xero alone (quotes + bills)
- How it works: Use Xero’s quoting/estimating features and standard pay-bills flow.
- Upside: Everything stays inside Xero; mobile access and core accounting are strong.
- Gap: No structured estimate-to-budget conversion, limited purchase-side control, and no native 3-way match to commitments.
Option C — Estimating software compatible with Xero
- How it works: Build estimates in a construction tool, convert to a budget, create POs/subcontracts, match/approve invoices, and then post approved, coded bills to Xero.
- Upside: One version of the truth from estimate to ledger; fewer AP corrections and faster month-end.
Quick comparison
| Spreadsheets + Xero | Xero only | Estimating tool + Xero | |
|---|---|---|---|
| Build estimates with markups/cost library | Manual | Light | Structured templates & libraries |
| Convert estimate to budget | Manual retype | Manual | One-click conversion |
| Raise POs from budget lines | Email/Excel | Basic | From budget; rates/qty locked |
| From budget, rates/qty locked | Manual | Limited | Automated checks & approvals |
| Post to Xero without retyping | Sometimes | Yes | Approved, fully coded bills sync |
Keep numbers consistent: the practical setup
- Cost code library: Agree a simple, reusable code list. Estimators use it at bid stage; buyers and QSs use the same codes for POs and valuations; Finance filters Xero reports by project/cost code.
- Estimate once, reuse everywhere: Templates + cost library speed up pricing and standardise descriptions and units.
- POs from the budget: When a package is won, raise the PO/subcontract from that specific budget line. That enforces the priced rates/qty and kills “rate drift.”
- Approvals & posting: Invoices are captured (email-in/OCR), checked against commitments, routed for sign-off, then published to Xero with the right GL and tracking—no second typing.
Example: Steel package done right
- Estimate/budget: Steel beams and fixings priced at agreed rates; both lines carry the correct cost codes.
- PO: Raised from the budget so the PO mirrors the estimate (same codes, units, rates).
- Delivery: QS certifies progress (e.g., 40 installed) and delivery notes show 42 delivered.
- Invoice: Supplier bills 45 at a higher fixing rate.
- Outcome: The system flags qty and rate variances against the PO/valuation; supplier reissues to 42 delivered at the PO rate. The approved, coded invoice then posts to Xero.
Where Planyard fits (subtle but clear)
Planyard is construction estimating software compatible with Xero. Estimators and PMs build the estimate once, convert it to a live budget, raise POs/subcontracts from that budget, and approve invoices against those commitments.
Finance then receives approved, fully coded bills in Xero—no duplicate entry. Result: consistent numbers from bid to final account.
