Cost Center Accounting in SAP Business One

MASK Business Consultancy Pvt. Ltd.  is  a SAP ERP consulting and Intelligent Enterprise Solution provider having strong presence in Mumbai , Pune and Gujarat. MASK Business Consultancy Pvt. Ltd. commitment to quality of service and expertise in IT has earned us the reputation as a preferred technology partner to many respected organizations.

Cost centers are responsibility areas for costs within organization and used to capture actual costs of an organization. Costs can can be captured as per department wise, product wise, area wise, responsibility person wise, etc. Assigning the costs to cost centers determines where the costs are incurred within the organization. Each cost center in SAP can belong to one or more cost center groups

However, not all costs are created equal. For instance, paying your employees well can increase satisfaction and productivity, which saves you money in the long-run. A customer service hotline costs you in terms of staff and telephone bills: but it could be a key factor in winning new business or keeping customers.

Deciding where to spend money to make money is a dilemma: resolving it requires accurate insight and control. Understanding and analysing expenses is faster and more accurate with cost centre accounting capabilities made possible by SAP Business One.

A key facet of everyday business management involves assigning authority and responsibility for different costs, budgets, revenue targets and investment decisions. You need accountability in order to:

• Identify where and how money is being spent/made

• Understand the relationship between costs and profits

• Evaluate the types of expenses being incurred

• Generate ideas to reduce costs and maximise resources

• Forecast, plan and refine budgets.

 Cost centre accounting is the process of classifying and analysing costs so that different departments and their managers can see the costs they are responsible for, track and compare budgets versus actuals, allocate resources more effectively, and assess performance.

1. Flexible accounts, cost centre allocation and budgeting

SAP Business One allows for flexibility in how you organise your general ledger and chart of accounts so you easily see different costs and revenues, group accounts to easily summarise balances, segment data and apply multiple dimensions.

Dimensions within SAP Business One are a versatile way to apply cost allocation rules depending on factors like function, geography, product lines, and multiple other criteria. Once set-up, cost centres can be allocated to transactions at the time of posting.

Automated distribution rules that are customised for your business and reporting requirements take the hassle out of cost centre accounting, and provides an up-to-date picture of expenses across your business.

The system can also be configured so you can upload budgets at the cost centre level and GL level.

2. Simplified and streamlined reporting

Cost centre accounting requires being able to both track expenses and issue reports that highlight the performance of different areas of the business. Finance teams may need to issue a large number of customised reports on an ongoing basis to ensure all managers are abreast of their financial position.

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

3. Cost centre manager dashboards

Using SAP’s analytics tools, managers of cost centres can access tailored dashboards that can include information to support cost management. For example, data could be drawn in to showcase:

• Actual budget consumed as a percentage of the total budget.

• Budget consumption for specific cost types: e.g., travel.

• Anticipated costs not yet allocated, e.g., from purchase orders in the system.

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

4. Capability to record expenses 

Manual processes like expense reimbursement claims are a significant time-waster for employees, especially if poor systems make it complicated or impeded approvals. SAP offers integrated expense management and accounts payable automation solutions from SAP Concur to help further streamline financial transactions and reporting. These expenses can be coded directly to a cost centre to further automate cost centre allocations and reporting.

SAP Business One is an ideal ERP solution for SME’s. It helps in managing inventory, customer demands, planning, production, scheduling and Distribution. This tool is easy to implement and maintain. Once it is implemented successfully, the easy-to-use feature makes it user-friendly and does not require much investment in end-user training.

Any updates that are related to industry can be easily installed and helps in refining the solution without any support from technical staff.

MASK Business Consultancy Pvt. Ltd.  confident that SAP Business One will   help clients streamline all the processes and challenges such as changing customer demands, planning, Costing, Quality Control, real-time access to critical information, intense competition, real time inventory tracking, and co-ordination with suppliers and increase the revenue of your company. SAP Business One is an ideal ERP solution for SME’s  that helps in maintaining a sustainable profit margin in a market.