Cost center
Cost centre is a part of your business used to collect and track costs. It can be a department, team, project or location. A cost centre usually does not record revenue; it shows where money is spent, supports budgeting and improves accountability.
Simple example
You create cost centres for Marketing, Customer Support and Premises. When a support invoice arrives, you post it to “Customer Support” to see how much this function costs over time.
A cost centre is different from a profit centre: a profit centre tracks both income and costs, while a cost centre focuses only on costs. In your accounting system you assign each expense a cost-centre code and then run reports to compare spend across teams, projects or periods.
Common ways to set them up:
- By department or function (e.g. Sales, IT, HR)
- By project or job (short-term or ongoing work)
- By location (branch, shop, region)
- By client or product line (to see service costs)
