Cost centre or chart of accounts

I want to keep track of how much income comes in from different services.

Would I create a new cost centre or a new account in chart of accounts for each type of service?

Could you also explain which each one is used for

Kind regards

You could just use separate GL accounts for each service. Cost centres would be used if you want to assign revenue and expense accounts to a cost centre to see profitablity by service

Thank you. I have seen I can see reports for the GL accounts. But how do I see the profitability of a cost centre?

and if you have a cost centre that is group can you see the profitability of that broken down into the sub cost centres for instance if I have a group called training and then in that cost centres named first aid and food safety could I see how much training had coming in and going out and how much of that was first aid and how much was food safety?

I can’t speak to the reports and such, but best practice is to ensure you have regular sales and cost of goods sold accounts in your chart of accounts and then use cost centers to organize the costs into logical groupings that make sense to you. It is not a good idea to use the chart of accounts to track products.

@Softwareprofs - I can’t seem to figure out how to assign a cost centre to a GL account.
This is what the manual says:

But it doesn’t say how we can assign an account to a cost centre

A cost center is associated with a company as is the chart of accounts. Then all accounts associated with the company are available to the cost center. Transactions to the general ledger need to be coded with the appropriate cost center.

Hi @fblauer yes I came across that. Cost centres would be a better way of doing it as it does income and expenses but I would need to be able to see the profitability of them.

Hi @James_Robertson I have been into the ledger it doesn’t look like I can filter by cost center?

On a few threads, I have seen something about financial analytics in accounts Report on Cost Center has this been removed?

There is analytics on the bottom left of the page, but this doesn’t seem to do what you are looking for. Seems to me there should also be a trial balance and PL by cost center, but doesn’t seem to be there?

No , doesn’t appear to be any reports or analytics on cost centers.

Also, on other reports such as P&L it would be better if you could set specific dates rather than just periods

There is a cost center column in the GL table that you can filter on. The profit and loss statement can be filtered by the cost center. Those would be the only report out of the box that would be useful to see. The Trial Balance, Cash Flow and Balance sheet are overall financial views and are not to be used by cost center. I believe you can create custom reports in erpnext and also connect to the database outside of erpnext to create other financial reports if needed.

Apparently some of this has been address in V 7.1:
From 7.1 release notes:
Multi-year Financial Statements
Profit and Loss Statement based on Cost Center and Project
New report Profitability Analysis based on Cost Center and Project
Unclosed previous fiscal year’s account balances in Balance Sheet and Trial Balance report

I havn’t tested yet since this version hasn’t been rolled out to the SAAS users yet, and I don’t have an up to date installed instance yet.

Cost centers are WIP. Give a thumbs up on GitHub to help prioritise the development of the feature