Expense and Income centers provide a logical framework that enables business units, branches or departments of businesses to behave like a business and calculate income-expense and profit-loss. Businesses buy many goods and services, employ people, and spend money. Likewise, it produces and sells products and services and creates income. All income and expenses are classified under budget items and a measurement-monitoring criterion is created for the business.

In Workcube, each purchase-sale and each expense has a budget item. Expense templates are used when a large number of periodic general purpose expenses are wanted to be distributed to all units of the business. For example, electricity and internet bills are recorded as a single transaction and a total expense. However, it is necessary to distribute these invoices to the units of the business and monitor which cost and revenue center receives what share of the general expenses.

How can we distribute general purpose expenses such as Electricity, Water, Internet, Kitchen-Cleaning, Building Maintenance, Rent?

As a single transaction, you can group a total expenditure by proportioning it according to cost centers, departments, and activity types. The following keys can guide this proportioning process.

Proportion by area: Find out which department uses how many square meters of space in the office, proportion it to the total area and distribute the expense to the cost center as a percentage. This approach is useful in distributing expenses such as rent, maintenance, electricity and cleaning.
Proportion per number of employees: Find out how many people work in which department and proportion them according to the total number of employees and distribute the expense to the cost center as a percentage. This approach works well in the distribution of expenses such as kitchen, internet, communication.
Specially, proportioning: Any expense can be proportioned depending on business dynamics. For example, while the sales unit covers 70% of the advertising expenses, approaches such as distributing the remaining 30% equally to other units can be used.

Example: Electricity Expense. Distribution
%	Cost Center	Expense Item
20%	Sales	Energy Expenses
30%	Technical Services	Energy Expenses
45%	Production	Energy Expenses
5%	Administration	Energy Expenses

Revenue can be distributed through templates

Profit centers of a business may exhibit internal customer behavior among themselves or apply a revenue sharing model. The lifeblood of businesses is sales. Mostly, units that sell centrally write all the income from sales as income to their own profit center. But they cannot make sales alone; there are many units that support them. In this case, it becomes difficult to track the income and expenses of these units on the budget. Then, a revenue sharing approach to other business units-profit centers that support the sales unit can be used.

For example, the sales unit creates its own income by taking a 10% share from each product and service sold, and while balancing its expenses within this income, it distributes the income obtained from sales to the units that produce the products and services. This type of calculation varies according to the cost structure of the business and the functions of the business units. It should be done carefully according to business dynamics and checked periodically according to changing conditions.

Example: Data Center Revenues Distribution
%	Revenue Center	Revenue Item
15%	Sales	Data Center Revenues
65%	Data Center	Data Center Revenues
10%	Production	Data Center Workcube Revenues
15%	Management	Data Center Revenues

When a product invoice associated with the “Data Center Revenue Distribution Template” is issued It will automatically distribute the budget according to the key above. In this way, revenue sharing will be made between supporting units or units that own the product or service. The main purpose of this approach is to ensure that all units behave like a business.

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Aydin ERSÖZ - 07/11/2024

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About Workcube Objects

Expense/Revenue Templates

Expense and Revenue Templates

Creating expense and revenue templates for finance, accounting, and budget management can help you better understand and manage the financial health of your business. These templates make it easy to track your expenses and incom...

Type: WBO Version: Catalsyt v5 Licence: Standard Author: Workcube Core