A cost centre is a financial tracking category used to group and monitor business expenses. Think of it as a "bucket" where you collect costs related to a specific department, project, team, or even a physical location.

In simple terms, a cost centre represents any part of your business that incurs costs. While they don't directly generate revenue, tracking their expenses is crucial for budgeting and financial analysis. Common examples include:

• Departments: Administration, Sales, Marketing, Operations
• Projects: New Website Build, Q4 Marketing Campaign
• Locations: Downtown Office, North-End Warehouse
• Teams: East Region Sales Team, Customer Support Group

Key Concept: A cost centre is a flexible financial label. While its primary purpose is tracking spending, you can define it to represent whatever organizational unit you need to report on—be it a function, a project, or a location.

Cost centres are the backbone for organizing your financial data throughout the system. By assigning employees to cost centres, you automate how their costs are tracked from timesheets all the way to payroll and accounting exports.

Automated Cost Tracking

• When an employee is assigned to a cost centre, their wages and hours are automatically grouped under that category.
• Data flows seamlessly from time tracking to payroll and reports without manual sorting.

Financial Control & Budgeting

• See exactly how much each department, project, or location costs to operate.
• Compare actual spending against budgets for each cost centre.
• Export organized financial data that's ready for your accounting software.

Payroll and Reporting Efficiency

• Process payroll with all costs correctly pre-allocated to the right business area.
• Generate reports that show labour costs broken down by any cost centre you create.
• Make informed business decisions about resource allocation and budget planning.

The core benefit is: assign once, organize everywhere.

When you create a cost centre, you will see a few key options that control how it functions:

• Cost centre name: The descriptive label for your cost centre (e.g., "Sales & Marketing").
• Is a sub cost centre of: Select the cost centres parent category. For example, a "Hollywood Widget Company" cost centre could roll up the costs from its children, like "Sales & Marketing" and "Operations," giving you a total company view.
• Make all cost centres report to this department: Click this box if you want all cost centres to report to this parent cost centre.
• Make this cost centre available to all employees: Click this box if you want managers to be able to assign any employee's time or expenses to this cost centre, even if it isn't their primary one. This is useful for temporary projects or shared initiatives.

Before you begin, think about how you want to see your business expenses organized.

1. Your Business Structure

• How is your company divided? By department, team, project, or location?
• What distinct areas of spending do you need to track separately?

2. Your Reporting Needs

• What financial insights will help you make better decisions?
• How will this data be shared with accountants or other stakeholders?

3. Your Future Growth

• Will you add new departments, projects, or locations in the future?
• Design a structure that is flexible enough to grow with your business.

Our recommendation: Start simple. You can always add more detailed cost centres later as your business needs evolve.