Cost Center Accounting in SAP Business One

Doing more with less in business isn't always easy. You need to grow your income even as you reduce waste and overspending.

However, not all costs are created equal. For example, paying your employees well can increase satisfaction and productivity, which saves you money in the long run. Customer service hotlines cost you money in terms of staff and phone bills: but they can be a key factor in winning new business or keeping customers.

Deciding where to spend money to make money is a dilemma: solving it requires insight and accurate control. Understand and analyze costs faster and more accurately with cost center accounting capabilities enabled by SAP Business One.

Accurate cost center accounting enables improvements

A key aspect of day-to-day business management involves assigning authority and responsibility for different costs, budgets, revenue targets, and investment decisions. You need accountability for:

  • Identify where and how money is spent/made
  • Understand the relationship between costs and profits
  • Evaluate the types of expenses incurred
  • Generate ideas to reduce costs and maximize resources
  • Forecast, plan and refine the budget.

Cost centers are a way to determine areas that cost your business money to operate without directly contributing to profits. So for example, a manufacturer's cost centers might include:

  • Production area or division
  • Service departments within each plant/facility
  • Research and Development Department
  • Functions such as marketing and human resources
  • A specific assembly line or large project

Each business determines the relevant cost centers depending on how they wish to track and allocate costs, and the benefits of understanding costs at a certain level of detail. More often than not, cost centers are based on departments within an organizational structure.

Cost center accounting is the process of classifying and analyzing costs so that different departments and their managers can see the costs they are responsible for, track and compare budget versus actual, allocate resources more effectively, and assess performance. In Australia, national businesses will often use cost centers to analyze profitability by country. A single ABN structure (one company) is divided into country cost centers for reporting. By doing this, each country manager can receive their own advantages and disadvantages for their region.

Four SAP Business One features that improve cost center accounting

Managerial accounting and being able to allocate costs to the right cost centers and generate reports is essential to leveraging internal efforts to increase efficiency and spend wisely.

Companies that want to excel in this field are advised to implement SAP Business One.

SAP Business One is a sought-after enterprise solution for small to medium businesses with powerful financial management functionality at its core. More effectively manage and automate financial and accounting processes made simple, even for complex multi-entity businesses.

Untuk akuntansi pusat biaya, SAP Business One menawarkan fitur-fitur berikut:

Flexible accounts, cost center allocation, and budgeting

SAP Business One allows flexibility in how you organize your general ledger and chart of accounts so you easily view multiple costs and revenues, group accounts to easily summarize balances, segment data, and apply multiple dimensions.

Dimensions in SAP Business One are a versatile way to apply cost allocation rules depending on factors such as function, geography, product line and several other criteria. Once setup, cost centers can be allocated to transactions at posting time.

Automated distribution rules tailored to your business and reporting requirements take the complexity out of cost center accounting, and provide an up-to-date picture of expenses across your business.

The system can also be configured so that you can upload budgets at both cost center level and GL level.

Simplified and streamlined reporting

Cost center accounting requires the ability to track costs and issue reports that highlight the performance of various areas of the business. The finance team may need to issue a large number of customized reports on an ongoing basis to ensure all managers are following their financial position.

Because SAP Business One centralizes and aggregates data with precision — including automating real-time accounting postings — it also streamlines financial reporting and reduces the burden on your team.

Cost center manager dashboard

Using SAP analysis tools, cost center managers can access customized dashboards that can include information to support cost management. For example, data can be pulled to display:

  • Anggaran aktual dikonsumsi sebagai persentase dari total anggaran.
  • Budget consumption for a specific type of expense: for example, travel.
  • Anticipated costs have not been allocated, for example, from purchase orders in the system.

Visual and intuitive dashboards make information clearer, helping managers to identify issues and take action in a more timely manner.

Ability to record expenses

Manual processes like reimbursement claims are a significant time waster for employees, especially if poor systems make them complicated or hinder approval. SAP offers integrated expense management and accounts payable automation solutions from SAP Concur to help further streamline financial transactions and reporting. These costs can be coded directly into cost centers to further automate cost center allocation and reporting.

Do you want help improving financial management in your business including cost center accounting? Talk to expert SAP Business One consultants now

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