Using SpendStream reference tags with Xero bank rules

What are reference tags?

Reference tags are unique identifiers created within SpendStream as part of your expense assignment rules. Each tag is linked to a specific assignment setup, such as a client, project, or type of billable expense.

In simple terms, a reference tag acts like a label that tells SpendStream exactly how a transaction should be handled.

For example, you might create an assignment for:

• Client A
• Google Ads expenses
• Marked as billable

SpendStream would then generate a reference tag linked to this setup.

When this tag is added to a transaction description in Xero, SpendStream can recognise it after reconciliation and automatically apply the correct assignment.

Instead of manually reviewing and coding each transaction, the tag does the work for you.

It tells SpendStream:

• Which client the expense belongs to
• How it should be categorised
• Whether it should be treated as billable

This allows transactions to be processed consistently and automatically based on predefined rules.

How reference tags work

The process relies on a combination of SpendStream configuration and Xero bank rules:

1. Create an expense assignment in SpendStream: Each assignment generates a corresponding reference tag. This tag is unique to that assignment and acts as the trigger for automation.
2. Configure a bank rule in Xero: Bank rules are used to standardise how incoming transactions are processed. As part of this rule, you include the reference tag in the transaction description.
3. Apply the bank rule to incoming transactions: When a transaction matches the rule conditions (e.g. supplier name, reference, or amount), Xero automatically updates the transaction and appends the reference tag to the description.
4. Reconcile the transaction in Xero: SpendStream only processes transactions after they have been reconciled. This ensures that only finalised data is used.
5. SpendStream reads the reference tag: Once reconciled, SpendStream scans the transaction description, detects the reference tag, and applies the linked assignment rule.
6. Automatic expense assignment: The transaction is now correctly coded as a billable expense based on the predefined logic, without any manual input.

Why use the transaction description?

The description field in Xero is used because:

• It is consistently available across transactions
• It can be modified automatically via bank rules
• It remains attached to the transaction after reconciliation
• It provides a reliable way for external systems like SpendStream to read additional context

By embedding reference tags in the description, you create a stable and predictable mechanism for automation.

When to use a reference tag instead of a tracking category

Although both reference tags and tracking categories help organise financial data, they serve fundamentally different roles..

Reference tags are designed for automation

Use reference tags when the goal is to drive logic and automate processes. They are particularly useful when:

• You want transactions to be assigned without manual review
• The assignment logic follows consistent, rule-based patterns
• The information does not need to be visible in Xero reports
• You want to avoid adding complexity to your tracking category structure

Reference tags operate behind the scenes and are primarily consumed by SpendStream rather than Xero users.

Tracking categories are designed for reporting

Use tracking categories when the goal is to analyse and report on financial data within Xero. They are appropriate when:

• You need visibility across dimensions such as client, project, department, or location
• The data needs to appear in Xero reports (e.g. Profit & Loss by tracking category)
• Multiple users rely on this information for decision-making
• You need to filter, compare, or segment financial performance

Tracking categories are part of Xero’s reporting layer and should be used intentionally, as they can quickly become complex if overused.

Best practice

Reference tags and tracking categories are most effective when used together, but with clearly defined roles:

• Use reference tags to control how transactions are automatically assigned in SpendStream
• Use tracking categories to structure how that data is reported and analysed in Xero

Avoid using tracking categories to replicate automation logic, as this can lead to unnecessary complexity and manual work. Instead, keep automation and reporting concerns separate.

Important considerations

• Reference tags will only be applied and recognised after a transaction has been reconciled in Xero
• Bank rules must be set up carefully to ensure tags are consistently applied
• Tags should follow a clear and standardised naming convention to avoid conflicts or misclassification
• Overloading transaction descriptions with inconsistent tags can reduce reliability