CXO Guide for Utilities on SAP: Four Reasons Not to Charge Cost Centers

HPC's latest CXO Guide for Utilities on SAP discusses four key reasons why charging cost centers is not a best practice for utility accounting. In working closely with utilities over the last 20 years, we've determined that cost centers are useful for summarizing orders, comparing budget to actual, and establishing a framework for accountability. But on the front end, charging them leads to less transparency and greater complexity.

On a related note, we've also found that utilities are often frustrated with reports in SAP that are difficult to understand. We hear the same questions everywhere: Where did these overhead costs come from? How were they calculated? Why do amounts vary inexplicably every month?

If you’re asking these questions, too, then it’s likely that your cost flow model overuses or misuses assessments, which leads to "bucket dumping" costs in order to close the books. Accounting needs to spread overhead each month, but doing so without considering the confusing effects on field operations can defeat the benefits of cost accounting to control spending. HPC helps customers address this challenge with our Cost Flow Streamlining service, which delivers total visibility into both direct and indirect costs, improved spending forecasts, and more efficient separation of costs into the appropriate regulatory categories.

Utility Controllers and FICO/FERC subject matter experts can request their copy of this new CXO Guide here.