how to handle cost-center in ofbiz

[Mugunth Subramanian]

Hi all,
I could not find documentation on handling cost center concept in ofbiz.

our company has about 5 cost centers. We need to associate the accounts
to various cost centers.
We need to be able to take reports for the whole company or to various
cost centers.

I am not sure how to handle cost centers. Pls help to clarify this.

Thanks,
Mugunth

[David E Jones]

Do you mean cost centers from an accounting perspective? If so they  
would be different Party records with the role Internal Organization,  
or perhaps even just different GlAccounts to categorize transaction  
entries.

-David


On Jan 8, 2008, at 7:03 AM, Mugunth Subramanian wrote:

> Hi all,
> I could not find documentation on handling cost center concept in  
> ofbiz.
>
> our company has about 5 cost centers. We need to associate the  
> accounts to various cost centers.
> We need to be able to take reports for the whole company or to  
> various cost centers.
>
> I am not sure how to handle cost centers. Pls help to clarify this.
>
> Thanks,
> Mugunth
>

[Mugunth Subramanian]

David E Jones wrote:
>
> Do you mean cost centers from an accounting perspective? If so they
> would be different Party records with the role Internal Organization,
> or perhaps even just different GlAccounts to categorize transaction
> entries.
>
Yes, I meant cost centers from an accounting perspective.

If we need to define the cost centers as different internal
organizations, is it possible to us to split a
transaction(payment/receipt) to various cost centers during transaction?

For example, consider I need make a payment for usage of a facility,
which is also shared by another cost center. While doing the payment, I
need to automatically split the payment to 2 accounts i.e. one in Cost
center A, and another cost center B as per some percentage which is preset.
Is it possible to do the above configuration using ofbiz ?

Thanks,
Mugunth

[David E Jones]

Cost centers mean different things in different organizations, which I  
guess is really the point of the idea isn't it...

Anyway, In OFBiz rather than manually classifying different  
transaction entries we have been taking the approach of trying each  
AcctgTransEntry back back to the source record it came from, like an  
InvoiceItem or an InventoryItem or a Payment or whatever, and you can  
do reporting based on pretty much anything...

-David



On Jan 8, 2008, at 7:48 AM, Mugunth Subramanian wrote:

> David E Jones wrote:
>>
>> Do you mean cost centers from an accounting perspective? If so they  
>> would be different Party records with the role Internal  
>> Organization, or perhaps even just different GlAccounts to  
>> categorize transaction entries.
>>
> Yes, I meant cost centers from an accounting perspective.
>
> If we need to define the cost centers as different internal  
> organizations, is it possible to us to split a transaction(payment/
> receipt) to various cost centers during transaction?
>
> For example, consider I need make a payment for usage of a facility,  
> which is also shared by another cost center. While doing the  
> payment, I need to automatically split the payment to 2 accounts  
> i.e. one in Cost center A, and another cost center B as per some  
> percentage which is preset.
> Is it possible to do the above configuration using ofbiz ?
>
> Thanks,
> Mugunth
>
>

[Vikrant.Rathore]

Hi Mugunth,

In General the cost center are designed for reporting and analytical purpose in Financial systems. In SAP you will find different codes. Now the cost center can have multiple dimension like they may relate to employee and project or just an employee or to a specific branch or a specific office.

This is something you will find pretty standard in most of the financial systems which later on changed to ERP (so they call them ERP because they can do more then finance).

In ofbiz there is no concept of cost centers since in the core you do not have any major financial module. But indeed you have a details implementation of Accounting standards (mind it cost centers are not accounting standards but used by company for reporting and analytical purpose).

Now in ofbiz every transaction has a source it can be an subsidiary, branch, employee, it can be a product, it can be a vendor, it can be invoice, it can be a payment (both incoming and outgoing). Moreover each accounting entry can be linked to customer, vendor, invoice, payment at a given time.

So indeed you can built a analytical and reporting layer on top of it. The problem comes only when you have multiple companies and have inter-company transaction and when you use a HQ company to pay for the expenses of subsidiary.

This part in ofbiz needs to be developed separately. You can have a look at http://www.opentaps.org/ which has a financial module but again you really still need to customize it to implement cost center which I found is very easy to do indeed.

Also if you can tell me your 5 cost center I can provide you some feedback on how to implement in ofbiz :), although it should be a job of a financial consultant ;).

If you are looking for a strong financial functionality then I would suggest you better look at some other opensource offerings which have a better financial modules. Ofbiz is very good product if you want a single unified ERP. But if your main focus is financial system and then built supporting layer around it then I would suggest make ofbiz as operational ERP and use some financial system as ofbiz provides a very good integration engine. Indeed you can find some examples of ofbiz integrated with sql-ledger another accounting system.

Thanks
With best regards,
Vikrant


-----Original Message-----
From: Mugunth Subramanian [mailto:[hidden email]]
Sent: Tuesday, January 08, 2008 10:04 PM
To: [hidden email]
Subject: how to handle cost-center in ofbiz

Hi all,
I could not find documentation on handling cost center concept in ofbiz.

our company has about 5 cost centers. We need to associate the accounts
to various cost centers.
We need to be able to take reports for the whole company or to various
cost centers.

I am not sure how to handle cost centers. Pls help to clarify this.

Thanks,
Mugunth

[Vikrant.Rathore]

Hi mugunth,

Your problem is very easy to address indeed, I have come across this situation when wanted to design ofbiz for retail implementation where you have multiple stores and you pay for the electricity of multiple stores from HQ. You use cost center to allocate costs to each store (so in your language each store will have expense account) but the payment is done from HQ.

This kind of implementation can be done but require some screens designing in ofbiz.

In your case each subsidiary will have its own organization code (it can be a parent or a subsidiary the ofbiz model supports it). Then when you pay for the expense the screen would split the payment and post it to respective expense account of each subsidiary and then link the payment via organization code. Then you can do report on each of the company for expense or from HQ you can have a single report split by company.

e.g. Your electricity bill is US$ 1000 and you need to split it to 3 organizations. So the entry might be when you receive the bill (if you have the details like each A = $300, B=$300, C=$400)
Dr. Utl. Expense A/C $300 (linked to organization A in ofbiz)
Dr. Utl. Expense A/C $300 (Linked to Organization B in ofbiz)
Dr. Utl. Expense A/C $400 (Linked to organization C in ofbiz)
       Cr. AP by vendor - $1000

You can have a separate screen design for this to validate that expense A+B+C = AP.

When you pay from HQ its simple

Dr. AP - $1000
         Cr. Cash or bank -$1000

If you do the entry at the time of payment then its more simple
Dr. Utl. Expense A/C $300 (linked to organization A in ofbiz)
Dr. Utl. Expense A/C $300 (Linked to Organization B in ofbiz)
Dr. Utl. Expense A/C $400 (Linked to organization C in ofbiz)
         Cr. Cash


I hope this is clear.

Thanks
With best regards,
Vikrant


-----Original Message-----
From: Mugunth Subramanian [mailto:[hidden email]]
Sent: Tuesday, January 08, 2008 10:48 PM
To: [hidden email]
Subject: Re: how to handle cost-center in ofbiz

David E Jones wrote:
>
> Do you mean cost centers from an accounting perspective? If so they
> would be different Party records with the role Internal Organization,
> or perhaps even just different GlAccounts to categorize transaction
> entries.
>
Yes, I meant cost centers from an accounting perspective.

If we need to define the cost centers as different internal
organizations, is it possible to us to split a
transaction(payment/receipt) to various cost centers during transaction?

For example, consider I need make a payment for usage of a facility,
which is also shared by another cost center. While doing the payment, I
need to automatically split the payment to 2 accounts i.e. one in Cost
center A, and another cost center B as per some percentage which is preset.
Is it possible to do the above configuration using ofbiz ?

Thanks,
Mugunth

[BJ Freeman]

You have accounting cost centers.
this shows up in the GL
Take a look at
https://demo.hotwaxmedia.com/accounting/control/GlAccountNavigate
one way to implement a profit center is
100000.profitcentercode
and for cash account
111100.profitcentercode
https://demo.hotwaxmedia.com/accounting/control/GlAccountNavigate?glAccountId=111100&trail=100000|100000|110000|111000|111100


The second part is the Party organization.
https://demo.hotwaxmedia.com/partymgr/control/findparty
select the internalorganization and click on lookup.
you will see differnt ID for departments or profitcenters.
this is no longer in the svn but I think it is a good example.


- <!--  A sample parent/subsidiary structure:
        Company has subsidiaries CompanySub1 and CompanySub2
        CompanySub1 in turns has a subsidiary CompanySub3
        Roles and relationships defined based on the
getParentOrganizations in party/servicedef/services_view.xml
  -->
  <Party partyId="CompanySub1" partyTypeId="PARTY_GROUP" />
  <PartyGroup partyId="CompanySub1" groupName="Company's First
Subsidiary" />
  <Party partyId="CompanySub2" partyTypeId="PARTY_GROUP" />
  <PartyGroup partyId="CompanySub2" groupName="Company's Second
Subsidiary" />
  <Party partyId="CompanySub3" partyTypeId="PARTY_GROUP" />
  <PartyGroup partyId="CompanySub3" groupName="Company's Third
Subsidiary" />
  <PartyRole partyId="Company" roleTypeId="PARENT_ORGANIZATION" />
  <PartyRole partyId="CompanySub1" roleTypeId="ORGANIZATION_UNIT" />
  <PartyRole partyId="CompanySub1" roleTypeId="INTERNAL_ORGANIZATIO" />
  <PartyRole partyId="CompanySub1" roleTypeId="PARENT_ORGANIZATION" />
- <!--  CompanySub1 is both a subsidiary and a parent
  -->
  <PartyRole partyId="CompanySub2" roleTypeId="ORGANIZATION_UNIT" />
  <PartyRole partyId="CompanySub2" roleTypeId="INTERNAL_ORGANIZATIO" />
  <PartyRole partyId="CompanySub3" roleTypeId="ORGANIZATION_UNIT" />
  <PartyRole partyId="CompanySub3" roleTypeId="INTERNAL_ORGANIZATIO" />








Mugunth Subramanian sent the following on 1/8/2008 6:03 AM:

> Hi all,
> I could not find documentation on handling cost center concept in ofbiz.
>
> our company has about 5 cost centers. We need to associate the accounts
> to various cost centers.
> We need to be able to take reports for the whole company or to various
> cost centers.
>
> I am not sure how to handle cost centers. Pls help to clarify this.
>
> Thanks,
> Mugunth
>
>
>
>

[David E Jones]

Thanks for you posts Vikrant, I think you answered this in more detail  
and better than I could.

A lot of work is going on in the ofbiz accounting component, to  
replace and surpass (like the automatic error journal, for example)  
the opentaps financials component. This is of course still a work in  
progress, and you are very correct about the intent of OFBiz, ie that  
it is intended to be a more complete ERP (, etc) system rather than  
designed as any sort of independent accounting system.

I also agree that with a little extension (and especially once the  
current accounting build out is complete) the OFBiz accounting stuff  
could do these same things that independent/separate financial systems  
do to make reporting easier when the source/trigger data isn't  
available.

Anyway, thanks again for your comments. I hope things are going well  
over there are Bertelsmann.

-David


On Jan 8, 2008, at 8:00 PM, <[hidden email]> <[hidden email]
 > wrote:

> Hi Mugunth,
>
> In General the cost center are designed for reporting and analytical  
> purpose in Financial systems. In SAP you will find different codes.  
> Now the cost center can have multiple dimension like they may relate  
> to employee and project or just an employee or to a specific branch  
> or a specific office.
>
> This is something you will find pretty standard in most of the  
> financial systems which later on changed to ERP (so they call them  
> ERP because they can do more then finance).
>
> In ofbiz there is no concept of cost centers since in the core you  
> do not have any major financial module. But indeed you have a  
> details implementation of Accounting standards (mind it cost centers  
> are not accounting standards but used by company for reporting and  
> analytical purpose).
>
> Now in ofbiz every transaction has a source it can be an subsidiary,  
> branch, employee, it can be a product, it can be a vendor, it can be  
> invoice, it can be a payment (both incoming and outgoing). Moreover  
> each accounting entry can be linked to customer, vendor, invoice,  
> payment at a given time.
>
> So indeed you can built a analytical and reporting layer on top of  
> it. The problem comes only when you have multiple companies and have  
> inter-company transaction and when you use a HQ company to pay for  
> the expenses of subsidiary.
>
> This part in ofbiz needs to be developed separately. You can have a  
> look at http://www.opentaps.org/ which has a financial module but  
> again you really still need to customize it to implement cost center  
> which I found is very easy to do indeed.
>
> Also if you can tell me your 5 cost center I can provide you some  
> feedback on how to implement in ofbiz :), although it should be a  
> job of a financial consultant ;).
>
> If you are looking for a strong financial functionality then I would  
> suggest you better look at some other opensource offerings which  
> have a better financial modules. Ofbiz is very good product if you  
> want a single unified ERP. But if your main focus is financial  
> system and then built supporting layer around it then I would  
> suggest make ofbiz as operational ERP and use some financial system  
> as ofbiz provides a very good integration engine. Indeed you can  
> find some examples of ofbiz integrated with sql-ledger another  
> accounting system.
>
> Thanks
> With best regards,
> Vikrant
>
>
> -----Original Message-----
> From: Mugunth Subramanian [mailto:[hidden email]]
> Sent: Tuesday, January 08, 2008 10:04 PM
> To: [hidden email]
> Subject: how to handle cost-center in ofbiz
>
> Hi all,
> I could not find documentation on handling cost center concept in  
> ofbiz.
>
> our company has about 5 cost centers. We need to associate the  
> accounts
> to various cost centers.
> We need to be able to take reports for the whole company or to various
> cost centers.
>
> I am not sure how to handle cost centers. Pls help to clarify this.
>
> Thanks,
> Mugunth
>

[Mugunth Subramanian]

[hidden email] wrote:
> This part in ofbiz needs to be developed separately. You can have a look at http://www.opentaps.org/ which has a financial module but again you really still need to customize it to implement cost center which I found is very easy to do indeed.
>
>  
Hi Vikrant,
Thanks for the detailed reply.
I have started exploring opentaps also. Can you please let me know the
customization details required in opentaps to implement the functionality.

Thanks & Regards,
Mugunth

[Daniel Riquelme]

Regarding Vikrant's first suggestion,

Which field has to be used to link the accounting entries with the different
organizations, partyId or organizationPartyId ?
I realize that organizationPartyId is used for the relationship with
GlAccountOrganization.


Daniel.

[Jacques Le Roux]

Maybe, since they are both primariry keys of PartyGlAccount,  both are needed ?
Though in  DemoGlSetupData.xml organizationPartyId is much more used
And partyId seems more used to define a party than to relate it with something else (usually done through a role).
Note also that in entity FinAccount organizationPartyId is descripted as "The internal organization Party that owns (or rather, is
liable for) the account."

So I'd say organizationPartyId, but it's more a guess from what I quickly found tonight

HTH

Jacques

From: "Daniel Riquelme" <[hidden email]>

> Regarding Vikrant's first suggestion,
>
> Which field has to be used to link the accounting entries with the different
> organizations, partyId or organizationPartyId ?
> I realize that organizationPartyId is used for the relationship with
> GlAccountOrganization.
>
>
> Daniel.
>

[Daniel Riquelme]

I've thinking about this and decided to implement it the following way.

1) Create new entities Center (Administrative Department, Business Unit) and
CenterRole (Cost Center, Expense Center, Profit Center, Funds Center).
1.1) Create relations from Center to Party (Internal Organizations) and any
other Entity (Product Category, Project, Marketing Campaign) that could
represent a Center in a company.
1.2) Create relations from Center to GlAccount. This way I will be able to
limit the use of each Center in Accounting Transactions.
2) Add relation from AcctgTransItem to Center and CenterRole
3) When adding an item to a transaction a drop down will list all the
Centers related to that GlAccount.
3.1) It will be possible to do things such as distribute an expense between
multiple centers.

Daniel.

On Mon, Oct 13, 2008 at 7:27 PM, Jacques Le Roux <
[hidden email]> wrote:

> Maybe, since they are both primariry keys of PartyGlAccount,  both are
> needed ?
> Though in  DemoGlSetupData.xml organizationPartyId is much more used
> And partyId seems more used to define a party than to relate it with
> something else (usually done through a role).
> Note also that in entity FinAccount organizationPartyId is descripted as
> "The internal organization Party that owns (or rather, is liable for) the
> account."
>
> So I'd say organizationPartyId, but it's more a guess from what I quickly
> found tonight
>
> HTH
>
> Jacques
>
> From: "Daniel Riquelme" <[hidden email]>
>
>  Regarding Vikrant's first suggestion,
>>
>> Which field has to be used to link the accounting entries with the
>> different
>> organizations, partyId or organizationPartyId ?
>> I realize that organizationPartyId is used for the relationship with
>> GlAccountOrganization.
>>
>>
>> Daniel.
>>
>>
>