Cost centersمراكز التكلفة

Cost centers answer a question the chart of accounts cannot: not what you earned, but what earned it. They are the tool for a business whose money comes from several activities that all post to the same account.

This differs from business to business. Before modelling anything, you have to know how the business actually works - the structure below is one worked example, not a template to copy.

1. The problem

A beauty centre sells products over the counter and services in a spa: nails, massage, lashes, facials. All of the service revenue lands on the same service-sales account, and all of the product cost lands in the same purchases. At the end of the month the owner can see services earned this much and nothing more.

What they actually want to know is which service earned it. Is the massage room paying for itself? Are the nails worth the shelf space? Splitting the sales account further does not scale: ten services would mean ten accounts, and then the same again for their costs.

2. Why the answer is not more items

The instinctive fix is to create a separate item per service per variant, and it collapses quickly. Ten services with a few variations each become an item file nobody can maintain, and you still cannot compare them without adding them up by hand.

Cost centers keep the item and vary the center instead. One Massage item, posted against whichever center performed it, gives you revenue and cost per center without touching the item file.

3. Build the structure

Cost centers live in their own navbar group, Cost centers management, with a Cost Centers screen also reachable under the Audit group:

The screen opens with a Type selector at the top and a tree below it with two columns, Account and Description. Type offers three values, which here read:

Those three names are set per company. A company that manages buildings can have the same three dimensions reading Property, Building and Apartment instead, in the selector and everywhere else they appear. Read your own company's selector; the three below are the names Libra starts with.

These are three parallel dimensions, not three names for one thing, and they are the same three that appear as checkboxes in the Force cost center usage panel below. Pick the Type first; the tree beneath it is that dimension's own structure.

Give each department its own center (nails, massage, lashes, facials). Then post every sale against the center that performed it. The item stays the same; the center changes.

4. Sections: Separating a subcontractor from your own staff

Here is the case that makes cost centers worth the effort. The spa has employed lash technicians, and a freelance one who comes in on Fridays and takes a percentage of what the client is billed. The service is identical. The item is identical. But the money behaves completely differently - one is a salary, the other is a share of the revenue, and at month end the freelancer has to be paid out of exactly what she brought in.

You do not create a second lashes item for her. You add a section to the cost-center structure (a subcontractors section) and post her work under it. Same item, different section.

If you have several subcontractors and want to know what each one earned, name the sections after them rather than lumping them into one subcontractors node.

The chart of accounts is where this becomes enforceable. Every account's details form carries a Force cost center usage panel with three boxes ( Projects, Sections and Operations) which make the corresponding dimension mandatory on any entry touching that account. Turn Sections on for the service-sales account and a posting can no longer be saved without saying which section it belongs to.

That is the difference between a structure people are supposed to use and one they cannot avoid.

5. Where the cost comes from

Revenue per center is the easy half. The cost side comes from purchases: the products consumed delivering each service (the polish, the wax, the oils) are bought, and those purchases are what have to be split per center. A center is only telling you something once both its revenue and its consumption arrive on it.

Note also that a salesman can be tied to cost centers directly, the auxiliary record toolbar carries a Salesman by cost centers button for exactly that.

6. The same three fields turn up everywhere

Projects, Sections and Operations are not confined to the accounting documents. The same trio sits in the header of a production invoice and a production formula, and again on an item family, where it sets the default for every item created under it. So manufacturing and dismantling can be attributed to a project or a department exactly like any other cost, and the attribution can be made the family's default rather than typed each time.

See Production formulas, invoices & orders and Item families.

Next: The chart of accounts for the account side · Key rules.