SAP Business One allows users to allocate cost centres to transactions with up to five dimensions. The purpose is to be able to allocate a cost centre to a transaction for transactional reporting, as opposed to general ledger account reporting. This provides users a more in-depth view of what is taking place in each area of the business.
Let’s take an example of this where dimensions come into play; say you have a general ledger account number and the accounting team does not require multiple segments for reporting (this would create too many accounts to monitor). Instead they enable cost accounting within SAP B1 by going to System Initialisation – General Settings – Cost Accounting and enable ‘Use Dimensions’. Generally, the option to display distribution rules ‘In Separate Columns’ is selected.
Once saved, the dimensions can then be setup for cost centres to be created per each dimension. A cost centre is a company, unit or division that performs a specific business function. Users define the various cost centres and can then assign revenue and expense accounts to those cost centres.
The cost accounting feature, and the ability to assign dimensions and distribution rules, is a very versatile function. Once setup correctly, cost centres can be allocated to transactions at the time of posting, providing users a complete view of the costs related to running each department. In addition, it allows you to generate reports that reflect the distribution of costs across selected dimensions.
This provides management ability to better understand its operations and can assist with future planning and deciding what areas require improvement. Through utilising this function, SAP Business One can help businesses better manage their operations and provide them with access to necessary data and information across all business lines or departments.
Note that any changes to your system should be discussed with your consultant prior to proceeding. Ensuring that workflows are not affected, that reporting requirements are achieved and that other areas are correctly setup to allow for cost centres to be allocated correctly is integral to achieving the desired result.
If you are looking to implement cost centre accounting within your organisation, please don't hesitate to contact our team today!