Glossary
What is a cost centre?
What a cost centre is, how accounting packages use it to split costs across departments, and how to get a similar view in SimpleERP, which does not have them.
Updated
In short
A cost centre is a department, location or activity whose costs are tracked separately, such as a factory or showroom. SimpleERP does not have cost centres; use branches or separate expense sub-accounts instead.
A cost centre is a part of a business, such as a department, location, machine or project, whose costs are tracked separately so the owner can see what each part spends. It does not change the accounts an entry posts to; it adds a tag that splits the same expense across centres. In many accounting packages, cost centres are tagged on entry lines and reported on their own.
Cost centre: a worked example
Harbour Steel Furniture, a fictional business trading in US dollars, wants rent and power split between its factory and its Eastside store. Without cost centres, it adds sub-accounts under the seeded expense accounts.
| Account | October 2026 |
|---|---|
| 5200 Rent | $1,200 |
| 5201 Rent: factory | $800 |
| 5202 Rent: Eastside store | $400 |
| 5210 Utilities | $1,840 |
| 5211 Power: factory | $1,590 |
| 5212 Power: Eastside store | $250 |
FAQ
Questions, answered
Is a cost centre the same as a profit centre?
No. A cost centre tracks spending only, such as an accounts or maintenance department. A profit centre tracks both income and costs, such as a branch or product line, so you can see whether it makes money on its own.
Does SimpleERP have cost centres?
No. There are no cost centres, cost categories or budgets. The closest options are branches, which tag every document and journal and filter account ledgers, and separate expense sub-accounts for each location or activity.
How do I move cost centre data into SimpleERP?
Cost centre tags do not carry over. Decide whether branches or sub-accounts fit your split, set them up first, then enter opening balances. Keep your old cost centre reports for the years already closed.
When are branches better than sub-accounts?
When the split is a real location with its own stock, staff or tax registration, such as a second shop. Branches tag whole documents. Sub-accounts suit a split inside one location, such as power for the press shop versus the paint line.
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