A cost centre is a specific department, location or entity within an organisation whose costs are analysed, allocated and controlled. It acts as a centre for cost control and analysis, allocating costs to specific activities, projects or products. This allocation enables organisations to understand the cost structure, control costs and improve efficiency through targeted measures.
When to use a cost centre?
It is important to use cost centres when accurate cost analysis is needed for internal control and decision-making. Cost centres help management identify cost drivers, allowing them to improve efficiency and allocate costs to specific activities or projects for better budgeting and cost control.
What structure do I apply?
To use cost centres effectively, a cost centre structure is important. How to do this? Start by identifying relevant departments, locations or entities within the organisation. Create the identified cost centres in your accounting software. Then allocate your costs to each cost centre based on direct and indirect costs. Ensure a consistent and logical hierarchy and take into account reporting needs and future changes in the organisational structure.
Cost centre allocation in TriFact365
With TriFact365, you link to different accounting packages. This link automatically synchronises cost centres between the two systems. This gives you access to the relevant cost centres and allows you to assign them to a booking line. If you want to know how our customers use cost centres, click here.