What? The cost type
What kind of cost or revenue arose: personnel costs, travel, external services, licences, fee income.
Cost and performance accounting for service firms: hours, not units.
Cost and performance accounting is a company's internal accounting. It answers one question: what do we actually make money on, and what not? teamspace covers all of it, secondary costs, allocations and reallocations included, and most of it runs automatically.
What is cost and performance accounting?
Financial accounting tells you whether the year went well. Cost accounting tells you why.
Cost and performance accounting, often simply called cost accounting, assigns every euro to three questions: what was spent (cost type), where it arose (cost centre) and what it was for (cost object). It sets the costs against what the firm produced, which for a service business mostly means hours sold. The result is a contribution margin per project, per client and per department. Financial accounting has a different job: it serves the tax office and the balance sheet, and it looks at the company as a whole.
Cost accounting that stops at the individual project only tells half the story, though. IT, administration, servers and licences have to be paid for too, salaries keep running during holidays, and a trip covering two clients is hardly ever split correctly in the system. That is why teamspace covers the whole of cost and performance accounting, secondary costs included: automatic allocations by allocation key, a salary cost centre for personnel costs and manual reallocations for one-off cases. Contribution margin II shows what is left once all of that has been distributed.
Doing this by hand takes an enormous amount of work: exporting hours from time tracking, assigning supplier invoices, spreading overheads across a spreadsheet by key, reconciling everything at the end, and doing it all again next month. In teamspace almost all of it happens automatically. A rule sets cost type, cost centre and cost object as soon as something is booked, allocations run on a fixed schedule, and the contribution margin is up to date every day. You can focus on what the figures are actually for.
Where things stand
Every project pays its way. Only the company doesn't.
- IT, administration and management sit on their own cost centres. The departments and projects that bring in revenue carry none of it and look more profitable than they are.
- Project reports show hours valued at a cost rate, not the actual salary. Holiday, sickness and idle time do not show up anywhere.
- A trip covering two clients sits entirely on the first project. Its margin looks worse than it is, and the second one looks better.
- The management accounts from financial accounting often arrive weeks after month end, and accounting, controlling and project management each work from a different spreadsheet. Every meeting starts with the question of which number is right.
Yet the data you need for steering is already there. Who worked is in the time entries, what was spent is on the expenses and supplier invoices, what was billed is on the invoices. In teamspace it is all created in the same system that analyses it. Cost and performance accounting puts this data together in business terms, with no interface and no time lag.
What, where, what for
Every euro is seen from three angles.
Take a hotel bill of 180 euros: cost type Travel, cost centre Consulting because that is where the consultant is employed, and cost object P-2026-018 Restructuring Müller GmbH because that is the project she travelled for.
Where? The cost centre
Which area of responsibility the amount arose in: consulting, development, marketing or administration. In teamspace, cost centres form a tree, and postings go to the leaves.
What for? The cost object
Which piece of work the amount arose for. For a service firm that is almost always a project or a contract, a one-off every time. Several projects can share the same cost object, for example all sub-projects of a framework agreement.
No extra work
Your team books as usual. A rule does the assignment.
Cost type, cost centre and cost object are pre-filled when an entry is made. Nobody has to pick them, but anyone with the right permission can override them. The effort comes once, when the master data is set up.
Cost item · Travel costs
Booked · 480.00 € · expense type set
Cost type Rule 1
Travel costs
Rule 1. expense type
Resolved from expense type
Result Travel costs
Cost centre Rule 2
Sales
Rule 1. employee → 2. client
Resolved from employee
Result Sales
Cost object Rule 3
Müller project
Rule 1. project
Resolved from project
Result Müller project
One rule per element type decides the assignment, set automatically on every element, not coded by hand.
Where the data comes from
Four sources feed the calculation.
Everything in teamspace that creates costs or revenue comes from exactly one of four sources. Each has its own cost and performance accounting section.
- Time entries: hours booked to projects and tasks, valued at the internal cost rate. The rate is held per period, so a pay rise does not distort earlier months.
- Cost items: expenses, commission and materials, meaning project-related costs without a supplier invoice.
- Documents: outgoing and incoming invoices, cancellations and credit notes, line by line. Every line carries its own cost type, cost centre and cost object.
- General postings: everything else, such as imputed costs like an owner's salary, accruals or corrections.
The rule is an order of precedence: the first source with a value wins. For project times, for example, the cost centre comes from the employee first and from the project as a fallback, while the cost type comes from the category. For invoice lines the item supplies cost centre and cost type. If a rule finds nothing, the field stays empty, as none of them is mandatory. After a manual change, a click on 'Reset' brings back the rule value.
Why service firms need different cost accounting from manufacturing
Classic cost accounting was born in the factory, with unit costs, overhead rates and cost allocation sheets. A service firm does not sell units. It sells the time and skill of its people.
Largest cost block
Conventional: Materials and machines teamspace: Staff
The product
Conventional: Unit, batch, series teamspace: Project, contract, ticket
Unit of measure
Conventional: Piece, kilogram, machine hour teamspace: Staff hour
Key steering figure
Conventional: Unit cost, stock turnover teamspace: Utilisation, day rate, project margin
Inventory
Conventional: Raw materials and finished goods teamspace: None: an hour not sold is gone
Overheads
Conventional: Surcharges on materials and production teamspace: Administration, IT, sales, management, spread over departments and projects
First call
Let's work through one of your cost centres.
Bring along what you currently split up in Excel: the IT costs, a salary, a trip that covered two clients. In the call you will see how teamspace turns that into cost centres, cost objects and contribution margins.
The principle
Two complete views of the same euros.
Every posting in teamspace carries a cost centre and a cost object. That gives two views of the same money: the department sees all of its costs, the project sees all of its own. Both totals must always show the same real result.
An example with four postings: a licence of 1,000 euros and a trip of 400 euros on cost centre 1, rent of 2,000 euros and revenue of 2,000 euros on cost centre 2. The cost centre view comes to minus 1,400 euros, and so does the cost object view. If one of the totals drifts after a reallocation or an allocation, something has been counted twice or lost.
This leads to a simple rule: movements stay within their view. Reallocations and allocations go from cost centre to cost centre or from cost object to cost object. The only bridge between the two views is the salary cost centre, which holds nothing but salary without a cost object.
A tip from practice: post overheads in full as well. General rent belongs on a cost centre and also on an internal cost object, such as "Administration". If either is missing, the cost centres add up to a different result from the cost objects.
Secondary postings
What arises in-house is passed on in-house.
Primary postings come from outside: times, expenses, documents and postings. Secondary postings arise in-house and move amounts on. teamspace knows three kinds, all using their own cost types in the 9000 class, so every list shows what came from outside and what was distributed internally.
- Reallocation for one-off cases. A consultant visits two clients on one trip, and the 640 euros sit entirely with Müller GmbH. A reallocation moves half to the Schmidt AG project. The original stays unchanged; the reallocation is a record of its own with a reason and a user.
- Allocation for whatever is split the same way every month. A rule on the cost centre sets when to distribute, by which allocation key and to where, and from then on the allocation runs automatically. That is how IT costs reach consulting, development and support, and how server costs from a pool reach the maintenance contracts.
- Relief through time entries. Salaries sit on a salary cost centre; every hour booked relieves it and charges the project. What is left at month end shows holiday, sickness and idle time.
How allocations and the salary cost centre work in detail is covered under cost centre accounting. What they do to the result is shown by contribution margin accounting: CM I works with primary costs, CM II also includes everything distributed internally.
“We mostly work with the budget column.”
In the system
Every cost centre has a place of its own.
In teamspace, cost centres, cost objects and cost types are not just attributes on a posting but objects in their own right. All three have their own tiles in the cost accounting area and a detail manager with the same tabs.
Overview
Tiles, monthly figures and the split by cost type. The cost centre overview puts actual, plan and previous year side by side.
Master data
Type, service relationship, owner and weighting. The type decides whether a cost centre carries costs or passes them on.
Movements
All primary and secondary postings. For reallocations and allocations, each line shows direction, type and counterpart.
Allocation rule
When to distribute, by which key and to which targets. Every cost centre and every cost object has its own rules.
Plan & analysis
Plan, actual and variance per month and cumulatively, for revenue and costs.
Internal cost analysis
An analysis tile with totals by cost centre, cost object and cost type, by quarter. Each row shows the bridge: CM I plus secondary costs gives CM II.
Plan and actual
A variance shows up in the month it arises.
Without a plan there is no variance, and without a variance nobody notices in time that something is going off course. In teamspace you plan revenue and costs per month for every cost centre and every cost object. Actuals sit alongside, and the difference is the variance.
The client view comes for free. Through its target project every cost object knows its client, so plan, actual, CM I and CM II are also available per client, including reallocations and allocations.
- The 'Plan & analysis' tab shows plan and actual per month and cumulatively since the start of the year. A growing variance is an early warning sign.
- Who plans is up to you. The obvious split: project leads plan their projects, department heads their department.
- In lists such as project times, cost type, cost centre and cost object appear as columns and can be filtered.
- The contribution margin per project is up to date every day, without waiting for the month-end close.
Where it stops
Cost accounting does not replace bookkeeping.
Financial accounting stays with your tax adviser, and documents go through the certified DATEV interface. Cost and performance accounting runs alongside as the steering view.
Financial accounting (external)
- For tax authorities, banks and shareholders
- Required by law, under commercial and tax law
- Result: balance sheet and profit and loss
- Looks at the company as a whole
Cost and performance accounting (internal)
- For management, department heads and project leads
- Voluntary and freely designed
- Result: contribution margins, costing, plan versus actual
- Looks at projects, clients and departments
- May include imputed costs that never appear in financial accounting
Imputed costs
What a company car really costs per month.
A company car bought for 36,000 euros net is written off over six years for tax purposes, so 6,000 euros a year. In practice it is driven for five years, and a new one would cost 42,000 euros. Cost accounting therefore uses 8,400 euros a year, while financial accounting stays at its 6,000 euros.
In teamspace this becomes a general posting of 700 euros a month on a cost type for imputed depreciation. With a fleet, the vehicles go to a collective cost object that an allocation spreads across the projects. The steering view works with actual consumption, and the bookkeeping does not have to take any of it on.
More in controlling
Where cost and performance accounting leads.
Cost and performance accounting is the whole system. Each of these pages looks at one part of it.
Contribution margin accounting
CM I and CM II per project, client and department, with a worked example.
Learn moreCost centre accounting
Allocate overheads, the salary cost centre, plan and actual per department.
Learn moreReporting
Project, finance, staff and CRM reports with drill-down to the posting.
Learn moreProject controlling
Budget, progress and forecast on the individual project.
Learn moreSales controlling
Pipeline, forecast and win rate in sales.
Learn moreIncoming invoices
Assign supplier invoices line by line to a project and a cost type.
Learn more
Part of controlling
Cost accounting is one building block of controlling.
Cost and performance accounting, contribution margins, cost centres and reports all draw on the same postings in teamspace. How the pieces fit together is shown in the overview of the controlling software.
Go to controlling softwareThe basics
Three stages lead from cost type to operating result.
Cost and performance accounting belongs to internal accounting. Unlike financial accounting it is not required by law; a company sets it up according to how it wants to steer. Its purpose is to assign costs to whatever caused them. Only then does it become clear which work pays off and where savings lie.
- Cost type accounting: which costs arose? Costs are recorded and assigned to a cost type. What can be assigned directly to a cost object is a direct cost. The rest are overheads, which first run through the cost centres.
- Cost centre accounting: where did the costs arise? Overheads are distributed across departments. Service cost centres such as IT or administration work for others, while final cost centres such as consulting carry the costs. More under cost centre accounting.
- Cost object accounting: what were the costs for? Direct costs and overheads meet at the cost object. Set against revenue, they give the contribution margin and, in the end, the operating result. More under contribution margin accounting.
The formula is simple: output minus costs gives the operating result. In financial accounting the counterpart is income minus expenses equals net profit. Both use the same documents but value some of them differently.
What it is about
From internal accounting to steering every day.
Cost and performance accounting assigns every amount to a cost type, a cost centre and a cost object, and so shows where a company works profitably. For service firms that mainly means valuing hours at internal cost rates, spreading overheads across departments and projects, and calculating the contribution margin in stages, from project to client to department. Bills of materials, inventory valuation and the balance sheet are deliberately left out.
Hours and documents are captured in time tracking and the invoicing software, and analysed on the project and in controlling. Cost and performance accounting, including cost centre planning, is part of the office and enterprise editions. Your contracting partner is 5 POINT AG, which has been developing teamspace in Darmstadt since 1999.
Related modules
Where the cost accounting figures come from.
Costs arise in three modules and reach cost and performance accounting without being transferred by hand.
Time tracking
Hours booked are valued at the internal cost rate and get their cost type the moment they are entered.
- Hours and receipts in one login
- Cost type from the category
- Cost rate per period
Project management
The project is the most common cost object, with plan, actual and contribution margin in one place.
- Project as cost object
- Contribution margin per project
- Client via the target project
Invoicing software
Outgoing and incoming invoices carry cost type, cost centre and cost object on every line.
- Revenue from outgoing invoices
- External services from incoming invoices
- Documents to DATEV
First call
Let's look at your cost structure together.
Tell us how you split costs today and which analysis you are missing. In the call we work out which cost centres, cost objects and allocations suit your business.
Frequently asked questions on cost and performance accounting
What is cost and performance accounting?
Cost and performance accounting is a company's internal accounting. It assigns every amount to a cost type (what), a cost centre (where) and a cost object (what for), and so shows which projects, clients and departments make money. Unlike financial accounting, it is voluntary and freely designed.
What are the tasks of cost and performance accounting?
It works out the operating result, provides the basis for costing and pricing, checks how profitable projects, clients and departments are, and prepares decisions, for example on day rates, staffing or clients. It does this in three stages: cost type accounting, cost centre accounting and cost object accounting.
What runs automatically in teamspace?
Cost type, cost centre and cost object are pre-filled by rule when something is booked. Allocations run on their schedule by allocation key, every hour booked relieves the salary cost centre, and CM I and CM II are up to date every day, per client too. What stays manual is maintaining master data and plans, one-off reallocations and general postings such as imputed costs.
Does teamspace replace financial accounting?
No. Financial accounting stays with your tax adviser, and documents and invoices go through the certified DATEV interface. Cost and performance accounting runs alongside as the steering view and may also include imputed costs, such as an owner's salary.
Does my team have to record more for cost accounting?
No. Cost type, cost centre and cost object are pre-filled by rule in time entries, cost items, invoice lines and postings. You set up the rules once in the configuration, and after that your team books as before.
Does teamspace allocate overheads?
Yes. Overheads from IT, administration or management are distributed by an allocation rule on the cost centre, with its own schedule, key and targets. One-off cases such as a trip covering two clients are handled by a reallocation. The details are on the cost centre accounting page.
What does 'total of cost centres equals total of cost objects' mean?
Every posting carries a cost centre and a cost object. That gives two complete views of the same money, and after every posting, reallocation and allocation both must show the same real result. If one drifts, something has been counted twice or lost.
Which edition includes cost and performance accounting?
Cost and performance accounting, with cost centre planning and costing, is part of the office and enterprise editions. Incoming invoices and the DATEV interface belong to the enterprise edition.