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Cost centers or Multi-company?


#1

You have a business with multiple branches doing different activities, sharing ownership and some resources. What is the best way to set this up in ERPNext?

  1. Separate Chart of Accounts
  2. Multi-company setup
  3. Cost centers

Depending on your preference, kindly give some guidance on how you would do this.


#2

If the branch is different entity then go for multicompany setup as you will need separate COA and separate financial statements but please note multiple company in ERPNext sharing same master data of items, customer, supplier etc so I assume the entities/branches doing same business.

If each entity doing different business lne another then probably you should go for different site instance for each.

You should use cost center within one entity only where you need to track costs e.g.department wise cost/profit tracking


#3

We are awaiting the cost-center based financial statements feature which will be in v11 and is under development which will allow you to do this.

I will not recommend multi-company as consolidating statements will become additional work.

Cost center tracking was not available on balance sheet items which is what is being added so that receivables, payables etc can be tracked cost-center (read branch) wise.

Hope this clarifies.


#4

I agree. At he moment multi-company seems simpler to use at this time compared to Cost Centers. Looking forward to improvements in v11


#5

@jai_kejriwal
What will be the right way to go for a setup in India with -

  1. Manufacturing unit in one state
  2. Warehouse/Retail in another state.
    Now with GST, both “branches” have to have different return filings for GST.

The setup gets a little complicated as customers send their orders as a single order whereas, the products are shipped from both the locations (and billed from both the entities)
Furthermore, accounts & payments are to be tallied collectively as a whole.


#6

@LifeP let’s wait to see the functionality in v11. I imagine there are some pending GST reports that may need to be added. Rest should work very well. Branches will be made cost centers.