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New Feature! Cost Center & Budgeting: Centralizing Expenditure Management
Some of you have been wondering, what exactly a cost center is or how do you manage it. In short, a cost center is all about focusing on the expenses related to a company's activities and functions. So, every department in the company, like production or marketing, is considered a cost center.
Their job is to responsibly handle the funds used for their activities and services. The aim is to save and efficiently use the company's resources, making it easier to control expenses overall. For a detailed explanation, keep reading this article till the end!
What is a Cost Center?
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A Cost Center, or in Indonesian, pusat biaya, refers to a department that incurs expenses for a company's operations but doesn't directly contribute to profits, although it still spends money for the company to function.
In terms of contributing to a company's profitability, cost centers don't do it directly like profit centers do. So, managers of cost centers, like those in HR or accounting departments, have the task of ensuring that their expenses don't exceed the budget or stay within the allocated budget. They're like the last line of defense to keep the company's pockets safe!
Purposes of Cost Centers?
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So, what are the objectives of cost centers for a business? Well, Cost Centers track expenditures. Their managers focus solely on keeping costs in line with the predetermined budget, without worrying about revenue or investment. They provide crucial data for management to pursue operational efficiency and maximize profits.
Now, those who like peeking into financial reports like regulators, tax authorities, investors, and creditors, rarely care about cost center data. So, their financial reports are usually prepared in a more general manner, without too much detail about cost centers. That's why cost center accounting falls under managerial accounting, not the type used for official financial or tax reports.
And segmenting costs into cost centers makes cost control and analysis easier. By breaking down resources to the cost center level, we can make more accurate budgets, forecasts, and calculations for the future. So, all calculations become more precise!
How Important are Cost Centers in Business?
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If you're wondering "how important?" well, cost centers are "very important" for your business. Cost Centers act as financial control centers for businesses looking to measure their performance, allocate resources, and optimize efficiency.
Recognizing this importance, ESB, as a provider of advanced culinary technology, has introduced a new feature in the ESB CORE product. With the Cost Center & Budgeting feature, you as a user can create monthly or annual budget plans for the company safely and monitor the company's budget movements, as well as analyze company expenditures in detail through the budget feature.
How to Use the Cost Center & Budgeting Feature?
To use the Cost Center & Budgeting feature, make sure your culinary business is already using the ESB's ERP system, namely ESB CORE. Surely, you'll enjoy various conveniences in managing your business expenses, including:
- Users can record individuals or departments responsible for managing operational costs.
- With the Project Report feature, users can view projects used in transactions.
- Budget Plan and Budget Detail are features in ESB Core where users can record financial planning for inbound and outbound budgets for branches.
- The Budgeting Dashboard in ESB functions to monitor budget movements in the detailed budget numbers according to each Chart of Account (COA) used.
For a complete guide on using the Cost Center & Budgeting feature, you can check it out via the link below. The instructions are comprehensive and easy to implement!
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