SAP B1 blog

In SAP Business One, indirect allocation rules help to distribute costs and revenues that cannot be directly allocated to a cost centre to several cost centres. This creates transparency and supports more precise analysis and control of company finances.

What are indirect allocation rules?

In contrast to direct CostsWhile indirect costs, such as material costs, can be allocated directly to a cost centre, indirect costs refer to expenses that are incurred across different cost centres, such as electricity or rental costs. Indirect allocation rules determine how these amounts are distributed to different cost centres.

Examples of indirect costs and revenues

• Rent
• Electricity
• Heating
• Administrative expenses

Distribution methods

SAP Business One offers flexible methods for defining the distribution:

• Breakdown by area: Distribution proportional to the area used by the cost centres.
• Breakdown by number of employees: Distribution based on the number of employees in the respective cost centres.
• Breakdown by turnover: Distribution according to the cost centres' share of sales.
• Breakdown by fixed amounts: Distribution on the basis of predetermined amounts.

Configuration of the indirect allocation rule

You can find the rules at Finance > Cost accounting > Allocation rules can be defined. Relevant accounts in the chart of accounts can be linked directly to the corresponding distribution rule. When postings are made to these accounts, the amount is automatically distributed according to the defined rule.

Advantages of indirect allocation rules

• More precise cost recording: A precise allocation of costs and revenues creates better transparency.
• Improved control: A clear cost structure supports the optimisation of business decisions.
• Automation: By linking to accounts, distribution takes place without additional effort.