Being able to set up links between the expenses generated and a specific cost centre on expense reports is crucial for financial monitoring and analysis, whether we are dealing with a department, area or project.
One of the most basic and recurring factors in most companies is being able to establish a relationship between the expenses generated and a specific cost centre, by which we mean a generic concept to which expenses are assigned: a projects, a department, an area of the company, etc.
Assigning travel expenses to a cost centre makes it possible to incorporate them with other expense variables.
The underlying aim is fundamentally financial. In the case of departments, being able to assign each travel expense to a cost centre makes it possible to incorporate them with the other expense origins that it is subject to. In view of the fact that, in many case, the expenses related to business trips account for a significant sum, it is important to take them into consideration in order to set the annual budget.
When the cost centre is a project, the situation is similar. It is important to account for these expenses in order to assign them.
Each organization usually uses its own coding system to link expense reports and cost centres. In turn, this coding system may incorporate certain control parameters. As there may be items assigned to different cost centres on a single expense report, this is useful so that extremely specific data can be seen at first glance.
Using an effective coding system enables supervisors to ascertain the details immediately.
This data is useful at various stages of the expense management process. Firstly, the supervisor who receives the expense report for approval has to be able to associate expenses with the corresponding cost centre. For instance, a project manager must assign and validate each expense depending on the context of each project. Meanwhile, at a later stage of the process, the supervisor or somebody in the finance department has to be able to ascertain and analyse expenses effectively based on their origin.