Using cost centres and departments with nominal accounts

You can use cost centres A segment of an organisation for which costs are required to be collected and formally reported on separately; e.g. a company division such as sales or production. to segment parts of the organisation so that you can monitor individual areas in your company. They are used to collect the costs / revenues associated with the specified parts of the organisation.

Departments are subdivisions of a cost centre where costs / revenue are required to be collected and reported on separately. For example, a cost centre could be a sales area such as North East or South West, and different departments could be sections such as Administration or Training.

If you are consolidating Nominal Ledgers, we strongly recommend you set aside a cost centre for each subsidiary company, thereby segregating each company.

Using cost centres and departments with Profit and Loss nominal accounts

Once you have set up your cost centres and departments, you can produce a Profit and Loss per cost centre and/or department combination.

To produce a Profit and Loss for individual cost centres and departments you must:

  • Create the appropriate nominal accounts.
  • Apply the appropriate nominal codes when posting transactions.

Applying cost centres and departments to transactions

Once set up, you need to make sure that transactions are posted to nominal account with the correct cost centre (and department, if you're using them). When you post transactions directly to your nominal accounts, you can select the nominal account with the correct cost centre and/or department combination.

For sales and purchase transactions, you can specify a default nominal account for a customer or supplier on their account. When you enter transactions, this nominal code is automatically selected. To make sure sales and purchases are assigned to the correct cost centre or department, you make sure this default nominal account has the correct cost centre and/or department combination. For example, a customer of your Manchester office, might have their default nominal account as 4000 MAN.

When transactions are automatically posted by Sage 200 to different accounts as part of a process, the transaction is posted to the account code set as the Default for the process, and the CC/ Dept associated with the customer or supplier account. For example, a settlement discount for a customer with a default nominal account of 4000 MAN, would post to a Discounts Allowed nominal account code of 4008 MAN.

Cost centres and department with stock items

When choosing the nominal account to use by default on invoice and order lines, Sage 200 looks at the default nominal account assigned to the stock item and the cost centre and/ or department (if used) set on the customer or supplier account. For example, if you've set a default nominal account of 4000 MAN on a customer account and a default nominal account of 4001 of a stock item, then 4001 MAN is automatically entered on invoice and order lines (sales and purchase), by default.

Using cost centres and departments with Balance Sheet Nominal accounts

If addition, you can also choose to produce a balance sheet by cost centre and /or department.

IF you choose to do this, Sage 200 posts transactions to balance sheet nominal accounts that have the same cost centre and/or department combination as your costumer and supplier accounts. Therefore transactions for customers or supplier accounts with default nominal accounts that have a cost centre and/or departments will post to different Debtors, Creditors and VAT Control accounts.

You must make sure that you have created balance sheet nominal accounts with all the same CC and Dept combinations as your customer and supplier accounts, otherwise your transactions may post to the suspense account.

To produce a balance sheet for individual cost centres and departments:

  1. Turn this on in the System Settings.
    1. Open: Accounting System Manager > Settings > System Settings | Operational settings.

    2. Select Split postings between cost centres for Balance Sheet accounts.
  2. Make sure you have created balance sheet nominal accounts with the required cost centre and department combinations.
  3. Specify the default nominal account with the correct cost centre and department on the customer, supplier and bank account records.

See Cost centre breakdown examples.

If you use the Split postings between cost centres for balance sheet accounts setting, make sure that your default nominal accounts for Creditors Control and Debtors Control are not set to use a specified account with a cost centre. To check this:

Open: Nominal Ledger > Utilities > Ledger Set Up > Default Nominal Accounts.

  1. Select the Balance Sheet tab.
  2. Make sure the Use Specified setting is set to No for both the Creditors Control and Debtors Control accounts.

Setting up cost centres and departments