In cooperatives operating in various sectors and with lots of staff, it is advisable to organize the accounting according to cost centers and/or projects. Every sales and purchase invoice, as well as salaries and other expenditures, are recorded not only on different accounts for the bookkeeping but also on definite cost centers, which can be separate for each employee, team or sector.
Thanks to cost centers, the cooperative can create easily reports in accordance with the loss-and-profit account showing the revenue and the expenses of each cost center and the amount of margin generated for the cooperative. Different cost centers can have different target margin percentages. If an employee works more for the cooperative than some others, the margin of his or her invoicing can be smaller than for others. The board of directors will decide on such percentages when budgeting. We advise to present them tot he general meeting, although acceptance of the budget is not part of its legal duties.
More often than not, financers demand reports per cost centers in order to verify that the subsidies have been used for the purpose they were granted for.