Which customers are profitable? Xero shows revenue minus linked costs, not full profit
Revenue minus linked costs is a narrower measure than profit. It deducts only the costs Xero records against a specific customer and leaves every other cost out.
By Manny Sidhu · Practical guide · Published · Updated
What this measure is, and is not
What Ask Alex shows is each customer's net invoiced revenue minus the costs linked to that customer in Xero. It is not full profit. Wages, overheads, and every cost that is not linked to a customer are left out, so a customer can look better on this measure than on a full profit calculation.
Ask Alex calls the result linked-cost contribution, and every answer states that it is not full customer profit.
What counts as revenue
Revenue here is net invoiced revenue: sales invoices minus sales credit notes, excluding tax, by the date on each document.
What counts as a linked cost
A linked cost is a supplier-bill line that Xero records against a specific customer through its linked transactions, or a Spend Money line linked the same way. No cost is assigned by matching supplier names to customer names.
Bill costs that are not linked to any customer, and supplier credits, are shown as separate totals. They are not deducted from any customer.
An illustrative example
Illustrative example, not customer data: a customer was invoiced A$40,000 excluding tax, and supplier bills of A$12,000 are linked to that customer in Xero. Revenue minus linked costs is A$28,000. Rent, wages, and software are not linked to any customer, so none of them is deducted, and the A$28,000 is not that customer's profit.
When no costs are linked
If no costs are linked to customers, Ask Alex shows customer revenue only and says it does not have the cost evidence to go further. Missing cost links do not mean the costs were zero, and the answer says so.
When linked costs exist, the answer lists the customers that have them, ordered by revenue minus linked costs: five by default, or from 1 to 20 if you ask for a specific number. Customers with no linked costs are not put in that order, because nothing has been deducted from their revenue.
Timing, freshness, and currency
Revenue and costs are dated by their own documents, so a cost can fall in a different period from the sale it relates to, and the answer says so. Ask Alex needs Xero records synced within the last 48 hours; with older or incomplete records it says the figures cannot be verified yet.
All amounts must be in one currency: AUD, USD, SGD, or EUR. If they are mixed, the answer stops rather than combining them.
What each answer shows
Every Ask Alex answer lists its source, scope, time, assumptions, and calculation, along with the Xero invoices, credit notes, bills, and cost links behind each figure. The figures are calculated by code from those records.