Introduction

In iVendNext, Cost Center Allocation is a feature that allows you to split general ledger (GL) entries across multiple Cost Centers based on predefined percentages. This is particularly useful for businesses that need to allocate shared expenses or revenues across different departments, regions, or business units.

For example, if your business has a shared marketing expense that needs to be split between the Sales and Marketing departments, you can use Cost Center Allocation to automatically distribute the expense based on a predefined ratio (e.g., 70% to Sales and 30% to Marketing).

How to Create a Cost Center Allocation?

Creating a Cost Center Allocation in iVendNext is a straightforward process. Here’s how you can do it:

1. Navigate to Cost Center Allocation:

• Go to Home > Accounting > Budget and Cost Center > Cost Center Allocation.

2. Create a New Cost Center Allocation:

• Click on New to create a new Cost Center Allocation.

• Enter the Main Cost Center (the Cost Center that will be used in the transaction).

3. Set Validity Period:

• Enter the Valid From and Valid Upto dates to define the period during which the allocation is applicable.

4. Add Child Cost Centers:

• In the Child Cost Centers table, add the Cost Centers that will share the allocation.

• Specify the Percentage for each Child Cost Center. The total percentage should add up to 100%.

5. Save and Submit:

• Once you’ve configured the allocation, click Save and Submit to activate it.

How Cost Center Allocation Works in Transactions?

Once you’ve set up a Cost Center Allocation, the system will automatically split GL entries when you book transactions against the Main Cost Center. Here’s how it works:

1. Booking a Transaction:

• When you create a transaction (e.g., Sales Invoice, Purchase Invoice, Journal Entry), select the Main Cost Center in the Cost Center field.

2. Automatic Splitting of GL Entries:

• The system will automatically split the transaction amount across the Child Cost Centers based on the predefined percentages.

• For example, if you have a $1,000 expense and the allocation is 70% to Sales and 30% to Marketing, the system will create two GL entries: $700 to Sales and $300 to Marketing.

3. Impact on Financial Reports:

• The split GL entries will reflect in your financial reports, allowing you to analyze income and expenses for each Cost Center separately.

Benefits of Cost Center Allocation

Cost Center Allocation offers several benefits for businesses:

1. Simplified Expense Allocation:

• Instead of manually splitting shared expenses across multiple Cost Centers, the system does it automatically, saving time and reducing errors.

2. Accurate Financial Reporting:

• By allocating expenses and revenues accurately, you can generate more precise financial reports for each Cost Center.

3. Better Decision-Making:

• With accurate allocation, you can make more informed decisions about resource allocation and budgeting.

Managing Cost Center Allocations

In iVendNext, you can manage multiple Cost Center Allocations and update them as needed. Here’s how:

1. Editing an Allocation:

• Go to the Cost Center Allocation list and select the allocation you want to edit.

• Update the percentages or add/remove Child Cost Centers as needed.

• Save and submit the changes.

2. Disabling an Allocation:

• If an allocation is no longer needed, you can disable it by setting the Valid Upto date to a past date.

• Disabling an allocation will not affect past transactions that were already allocated.

Use Cases for Cost Center Allocation

Here are some common scenarios where Cost Center Allocation can be useful:

1. Shared Overhead Costs:

• Allocate shared overhead costs (e.g., rent, utilities) across different departments or business units.

2. Marketing Expenses:

• Split marketing expenses between different product lines or sales channels.

3. Revenue Allocation:

• Allocate revenues from a joint venture or partnership across multiple Cost Centers.

Conclusion

Cost Center Allocation in iVendNext is a powerful feature that simplifies the process of splitting expenses and revenues across multiple Cost Centers. By automating the allocation process, you can save time, reduce errors, and generate more accurate financial reports.

Whether you’re allocating shared overhead costs, marketing expenses, or revenues, Cost Center Allocation provides the flexibility and functionality you need to manage your financial data effectively.