Cost Center Setup Considerations
A list questions to consider before you begin implementing cost centers.
Before you enable the cost center feature in Spectrum, it is helpful to think about how and when you want to conduct the implementation.
Important: This isn't an exhaustive list.
Questions to consider as you're getting started
- What types of information are you trying to segregate? What types of activities does your company participate in?
- Do you care about tracking activity by location, region, areas, divisions, plants, types of production, other?
- What are your lines of business?
- What's the lowest level of activity that you want to track?
- How are these areas managed today?
- Can you roll these activities together and group them by management responsibility?
- What are your reporting requirements?
- What types of security requirements do you need to plan for?
- Do you foresee cost centers following your current organizational chart?
- Will cost centers and cost groups have their own balance sheets?
- How will cost centers function along with your Chart of Accounts structure? Will you need to modify the existing structure?
- What type of growth can be expected in the organization?
Other Points of Consideration
- Have each member of the design team outline the level of activity they believe should comprise your cost centers. Only write down the name or description of the activity — don't worry about the coding structure at this time.
- After compiling a draft of potential cost centers, determine if each activity would be better managed in Job Cost (project tracking), in General Ledger (departmental or line of business reporting), or by using cost centers. Refine your list of cost centers.
- Next, start consolidating similar activities. Are there any sub-groupings that would be required? In other words, do you need to track each activity by location, plant, or store?
- Start defining groupings based on management responsibility and reporting requirements.
- Review your General Ledger and Department structure. Determine if our draft cost center methodology works together with your G/L structure.
- Finally, start developing a coding structure that meets your needs.
