Cost accounting for service providers
Cost accounting shows what makes your company money and what does not. projectfacts covers it in full, including secondary costs, allocations and reallocations, and most of it runs automatically.
Enquire nowWhat is cost accounting?
Cost accounting, known in German as Kosten- und Leistungsrechnung (KLR), is a company's internal accounting. It asks three questions of every euro: what was incurred (cost type), where it was incurred (cost centre) and what for (cost object). It sets costs against output, which for service providers mainly means the hours sold. The result is the contribution margin per project, per customer and per department. Financial accounting has a different job: it serves the tax office and the balance sheet and 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 for two customers is almost never split correctly in the system. Since release 2026.3, projectfacts therefore covers cost accounting in full, including secondary costs: automatic allocations by allocation key, a salary cost centre for personnel costs and reallocations for individual cases. Contribution margin II shows what is left after this distribution.
By hand this takes a lot of work: exporting hours from time recording, assigning incoming invoices, distributing overheads by key in Excel, reconciling everything at the end, and doing it all again every month. In projectfacts a rule sets cost type, cost centre and cost object as soon as something is booked, allocations run on a fixed date, and the contribution margin is updated daily. You can concentrate on what the reports are telling you.
Every project pays off. Only the company does not.
Overheads are left behind
IT, administration and management sit on cost centres of their own. The departments and projects that generate revenue carry none of it and look more profitable than they are.
Valued hours instead of salary
Project reports show valued hours, not the real salary. Holidays, sickness and idle time do not appear anywhere.
Shared costs in one place
A trip for two customers sits entirely with the first project. Its margin looks worse than it is, and the second one looks better.
Figures arrive too late
The management accounts often arrive weeks after month end, and accounting, controlling and project management work from different Excel versions.
Yet the data needed for steering has been there all along. Who worked is in the time bookings, what was spent is in the expenses and incoming invoices, and what was charged is on the invoices. In projectfacts this data is created in the same system in which it is analysed. Cost accounting puts it together in business terms, with no interface and no time lag.
Every euro is seen from three angles
An example: a hotel bill of 180 euros gets the cost type travel expenses, the cost centre consulting because the consultant is employed there, and the cost object “Restructuring Müller GmbH” because she was travelling for that project.
What? The cost type
What kind of cost or revenue arose: personnel costs, travel expenses, third-party services, a licence or fee income.
Where? The cost centre
In which area of responsibility the amount arose: consulting, development, marketing or administration. Cost centres are arranged as a tree in projectfacts, and postings go to the leaves.
What for? The cost object
For which service the amount arose. For service providers this is almost always a project or a contract. Several projects can use the same cost object, for example all sub-projects of a framework agreement.
No extra work
Your team books as usual. A rule handles the assignment.
Cost type, cost centre and cost object are pre-filled when an entry is made. Nobody has to select them, but anyone with the right permission can override them. The effort comes once, when the master data is set up. Everything that creates costs or revenue in projectfacts comes from one of four sources.
The rule is an order of precedence: the first source with a value wins. For project times, for example, the cost centre comes first from the employee and otherwise from the project, and the cost type from the category. For document items, the article 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, one click on “Reset” brings back the value from the rule.
- Time bookings: hours on projects and tasks, valued at the internal cost rate stored for each period
- Cost elements: expenses, commissions and material, in other words project-related costs without a supplier document
- Documents: outgoing and incoming invoices, cancellations and credit notes, each item with its own assignment
- General postings: everything else, such as imputed costs, accruals or corrections
Why service providers need different cost accounting from manufacturers
Let us work through one of your cost centres
Bring along what you currently distribute in Excel: the IT costs, a salary, a trip for two customers. In the conversation you will see how projectfacts turns them into cost centres, cost objects and contribution margins.
Enquire nowTwo complete views of the same euros
Every posting in projectfacts carries a cost centre and a cost object. That gives two views of the same money: the department sees all 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 two totals differs after a reallocation or allocation, something has been counted twice or lost.
Movements stay in 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 only salary without a cost object.
Book overheads in full too
General rent belongs on a cost centre and also on an internal cost object, such as “Administration”. If one of the two is missing, the cost centres add up to a different result from the cost objects.
What arises in-house is distributed in-house
Primary postings come from outside: times, expenses, documents and postings. Secondary postings arise in-house and move values on. projectfacts has three kinds, all using their own cost types in class 9000, so every list shows what came from outside and what was distributed internally.
Contribution margin I is based on primary costs, contribution margin II also includes everything that was distributed internally.
Reallocation for individual cases
A consultant visits two customers on one trip, and the 640 euros sit entirely with Müller GmbH. Half goes to the Schmidt AG project by reallocation. The original stays unchanged, and the reallocation is a record of its own with a reason and a user.
Allocation for what is distributed the same way every month
A rule on the cost centre defines when, by which allocation key and to where costs are distributed, after which the allocation runs automatically. This way IT costs end up with consulting, development and support, and server costs from a pool end up with the maintenance contracts.
Relief through time bookings
The salary sits on a salary cost centre, and every hour booked relieves it and charges the project. What is left at month end shows holidays, sickness and idle time.
Cost centres, cost objects and cost types have a place of their own
Overview
Tiles, monthly values and the breakdown by cost type. The cost centre overview puts actual, plan and previous year side by side.
Master data
Type, output reference, owner and weighting. The type decides whether a cost centre carries costs or passes them on to others.
Movements
All primary and secondary postings. For reallocations and allocations, direction, type and counterpart are shown in the row.
Allocation rule
When costs are distributed, 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 cumulative, for revenue and costs.
Internal cost analysis
Totals by cost centre, cost object and cost type in quarters. Each row shows the reconciliation: CM I plus secondary costs gives CM II.
Plan and actual
A variance shows up in the month it occurs
Without a plan there is no variance, and without a variance nobody notices in time that something is getting out of hand. In projectfacts you plan revenue and costs per month for every cost centre and every cost object. The actual figures sit alongside, and the difference is the variance.
The customer view comes about by itself. Through the target project every cost object knows its customer, so plan, actual, CM I and CM II are also available per customer, including reallocations and allocations.
- Plan and actual per month and cumulative since the start of the year: a growing variance is an early warning sign
- You decide who plans, the obvious choice being project management and department heads
- Cost type, cost centre and cost object as a column and filter in lists such as project times
- Contribution margin per project updated daily, without waiting for the month-end close
Cost accounting does not replace bookkeeping
What a company car really costs each month
A company car costing 36,000 euros net is depreciated for tax purposes over six years, that is 6,000 euros a year. 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 with its 6,000 euros.
In projectfacts this is a general posting of 700 euros a month on a cost type for imputed depreciation. If there is a fleet, the vehicles go to a collective cost object that is allocated to the projects. The steering view thus works with actual consumption, without accounting having to take any of it over. Financial accounting stays with the tax adviser, and invoices and documents go across via the DATEV interface.
Three stages lead from the cost type to the operating result
Cost accounting is part of internal accounting. Unlike financial accounting it is not mandatory, and a company sets it up according to its own steering needs. Its purpose is to assign costs to whatever caused them. Only then does it become clear which service pays off and where savings can be made.
The formula is simple: output minus costs gives the operating result. For service providers this mainly means valuing hours at internal cost rates, distributing overheads across departments and projects and calculating the contribution margin in several stages. Bills of materials, stock valuation and the balance sheet are deliberately left out of projectfacts.
Cost type accounting
Which costs were incurred? Costs are recorded and assigned to a cost type. Whatever can be assigned directly to a cost object is a direct cost. The rest are overheads and go through the cost centres first.
Cost centre accounting
Where were the costs incurred? Overheads are distributed across the departments. Service cost centres such as IT or administration work for others, while final cost centres such as consulting carry the costs.
Cost object accounting
What were the costs incurred for? Direct costs and overheads meet at the cost object. Set against revenue, this gives the contribution margin and, in the end, the operating result.
Where cost accounting leads next
Controlling
Reports from every area and the key figures service providers steer by.
Project controlling
Plan/actual comparison, contribution margin and warnings for the individual project.
Earned value analysis
Earned value and forecast: will a project stay within its time and cost frame?
Project time recording
Booked hours are valued at the internal cost rate and get their cost type as soon as they are recorded.
Incoming invoices
Check supplier invoices and assign each item to a project and a cost type.
Invoice
Outgoing invoices supply the revenue, with cost type, cost centre and cost object per item.
Let us look at your cost structure together
Tell us how you distribute costs today and which report you are missing. In the conversation we will work out which cost centres, cost objects and allocations suit your company.
Enquire nowStill have questions? We have the right answer!
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