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Sage 50 Accounts Professional: How to create cost centre

Posted on 2010-09-24
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Last Modified: 2012-05-10
Hi,

I am evaluating Sage 50 professional.

It has been a while since I worked on financial systems.
Re: Nominal Ledger
 
How do I set up multiple cost centres - at present there appears to be only one.

I want to process accounts for 4 different companies within the nominal ledger.  I would expect that I could do this by creating new "cost centres" .  How do I do this ?
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Question by:Patrick O'Dea
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by:moorhouselondon
ID: 33759747
Strictly speaking it can't be done with Line50.  However, it is possible to achieve by creative coding of the Nominal Ledger.  Best to use all 8 digits though if you have a lot of Cost Centres, however you will need to migrate all the Control Accounts (e.g., Debtors Control Account) to 8 digit accounts otherwise there will be problems with P&L and BS ranges.  What you can do having set this up is to use a particular group of digits within the Nominal Code to act as a Cost Centre Code.  

I recommend you have a Nominal Ledger section per Cost Centre, rather than having say a group of Cost Centre Codes per Nominal category.

With ODBC you can generate all your reports using Excel.  If you do this however, I suggest that you start your Nominal Ledger at 10000000.  Reason is that Excel does irritating things with numbers that have leading zeroes on them.  

This comment is an overview which might gloss over details which need explaining in more depth, please come back to us for a more in-depth procedure.
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by:moorhouselondon
ID: 33759767
Let's say you have 4 Cost Centres A B C D

Nominal Ledger CC A range:-

10000000 - 19999999

Nominal Ledger CC B range:-

20000000 - 29999999

Nominal Ledger CC C range:-

30000000 - 39999999

Nominal Ledger CC D range:-

40000000 - 49999999

Each Cost Centre uses an identical structure, or leaves a gap if no entry exists e.g., Widget Sales might be coded 10004000, 20004000, 30004000 for example.  You will also need a Nominal Code range for things that are Company-wide rather than specific to a CC, these could all be lumped into the range 9XXXXXXX for example.

You would have a P/L Layout with 4 mega-sections and a B/S Layout with 4 mega-sections, plus you can define Cost Centre P/L's and B/S's.

***Do Not be tempted to use Sage's Department feature.  It is too easy to forget to enter a Department at time of posting a transaction, plus the reporting is not as comprehensive.***
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Author Comment

by:Patrick O'Dea
ID: 33759972
Thanks Moorhouselondon for a very comprehensive answer.

Two points of clarification;

1. I understand your explanation above.  I am just wondering how much grief it will cause in practice?  Would it mean years of painful compromises and convoluted processes.  (Probably not but I just thought I would ask since you may well have been down this road).

2. Is there any Sage product (or other supplier in same budget) that will facilitate multiple cost centres AND a strong management reporting facility.   I am not necessarily stuck to any one product/supplier.

Thanks again,
great answer in the first place.
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Accepted Solution

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moorhouselondon earned 500 total points
ID: 33761202
I have setup this kind of arrangement for several clients.  The only problem I've had is with accountants coming in later on, misunderstanding the setup and doing silly things (like reorganising the Chart of Accounts and inadvertantly clearing down accounts that were clearly Balance Sheet related at Year End) - I'd say a very, very large number of Sage users stick with the Standard Nominal Ledger, and external overseers may therefore freak out when confronted with something different.  It is important that you get everyone involved agreeing to this method of doing things beforehand.  

The thing about many Accounts packages (of which Sage is an example) is that once a Nominal Account is setup and posted to is that it is impossible to delete that account later without someone knowledgeable about the technical aspects of Sage getting involved.  This is for fraud prevention reasons and makes things less flexible for day-to-day reporting purposes.  

What I do with clients who need to go a bit further than what Sage can offer them "out of the box" is to write front-ends which funnel transactions into Sage and do the day-to-day reporting, and use Sage for certain elements (which can vary depending on requirements).  This is a compromise to a certain extent, but a lot cheaper and easier to understand than some all-singing all-dancing systems I've come across, which in any case need careful configuring.  

Another advantage of "front-ends" is that they can cut down the number of transactions actually posted into Sage.  Sage can become unwieldy with huge numbers of transactions, which becomes worse using ODBC to filter and report on transactions.

N.B. I have no accounting qualification, and this must be borne in mind when reading my comments.
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Author Closing Comment

by:Patrick O'Dea
ID: 33761426
Excellent
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