Tuesday, May 11, 2021

7 Considerations When Creating Cost Centers

Contributed by Danielle Hancock

We’ve reached the stage of the Finance Strategic Transformation (FST) project when decision-makers in schools and units are developing their cost center structures for the Workday Financials Foundation Data Model (FDM), Workday’s version of chart of accounts.

A cost center (CC) is an area within a school/unit that owns a subset of revenues and/or expenses. They report funds available and manage multiple fund sources. The current Oracle term Organization will most closely translate to Cost Center in Workday Financials terms, but some schools and units are taking advantage of Workday’s increased cost center functionality to break their organizations into smaller sections. Therefore, you may find that one Oracle org will be broken into multiple different cost centers in Workday Financials.

Here are seven things to consider as you develop your cost centers:
  1. Budgeting happens at the CC level. (You may also choose to budget at any worktag level.)
  2. Employees should be assigned to the CC, for the most part; if no employees are assigned to it, using the program worktag instead might make more sense.
  3. Revenue and expenses will be reported separately in the CC.
  4. Consider the approval level: Will expenses route to the same people? If not, CCs may need to be split up.
  5. Think about how you want your reports to look as you plan now.
  6. Specific expense categories (such as professional development) don't need to be separated; that information can be captured through the spend hierarchy.
  7. Remember the CC structure is an iterative process. The first attempt at a CC structure isn't necessarily the final CC structure. You will have the ability to adjust it once you see what the mapping looks like with data. You can add CCs, subtract CCs, or shift CC through March 2022.

Have questions or thoughts?  Start a discussion in the Online Community!  Danielle has posted this piece there and would love to hear from you.

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