Using cost codes / Purchase Orders in foundU

  Within foundU Cost codes and Purchase Orders are the same thing.

If your platform is set up to use invoicing, they will be referenced throughout your platform as Purchase Orders or POs. If not, they will be referenced as Cost Codes.

In this article, they will be referred to as cost codes. 

Cost codes / purchase orders are useful for:

  • Allowing you to track & maintain budgets for jobs, department spending, events, etc.
  • Reporting to assist businesses in making decisions.
  • Uploading your data into your accounting software for your Profit and Loss (P&L) statements.
  • Invoicing your clients

Best practice tips:

    • Set up & utilise the Cost Code Library.
    • Ensure that all employees are allocated. This is especially important for salaried employees!
    • Understand how cost codes interact & know what cost codes are assigned where. 

You have several options for applying cost codes. You can:

  1. Cost a whole roster. This is the most commonly used method. Cost codes are pulled in from your rosters so employee shifts are costed to where they are rostered. 
  2. Cost all shifts on a single day per roster. Using day costing, all shifts on a day can be costed separately to the roster. 
  3. Cost an individual shift (or part of a shift). Using shift costing, a specific shift can be costed separately to the roster. Multiple cost codes can be applied to a single shift too. 
  4. Cost an individual person's position. This allows you to cost a position regardless of where the employee works.
  5. Cost a specific line item in payroll. Cost codes can be assigned to individual line items when editing or adjusting payslips. For more information see our helpful Edit or Adjust Payslips article.

Before You Start

How cost codes work

There are 4 places where cost codes can be set. On an employee's position, on a roster, on a day for a roster, and on a shift. Understanding how cost codes interact will help you to determine how you should configure your platform to get the reporting the way you want. 

Cost code options

The first thing to note are the options available when setting your cost codes.

  • Override - Cost codes that are set to override will ignore codes that are lower in the hierarchy and be used instead. 
  • Append - Cost codes that are set to append will be added to the end of codes lower in the hierarchy.
  • Fallback - Only position cost codes have a fallback option. Cost codes set to fallback will be used if no other cost code is present. The most common instance of this will be with leave entitlements. 

Cost code hierarchy

The second thing to note is the hierarchy of cost codes. I.e. if override is used in several places, which cost code takes preference?

  1. Position
  2. Shift
  3. Day
  4. Roster

Cost code tester

SCENARIO

We'll use the following example to look at how the different options for cost codes will behave.

Jack is employed as a Bartender in an RSL. Jack has been rostered into the Front of House roster.

  • There is a wedding on this day which will be costed separately. Adjust the Day code settings to see how this interacts with the roster cost code. 

  • Jack ends up spending his time working behind the bar and needs to be costed here. Adjust the Shift code settings to see how this interacts with the day and roster cost codes.

  • Jack has several positions on his profile, allowing him to work and be paid for different roles. Some of these positions are costed separately. Adjust the position code settings to see how this interacts with the roster, day, and shift cost codes.

To highlight the above information, please feel free to adjust the settings in the below interactive tool. 

 

  Note: If the position cost code is set to 'Fallback' this will behave as though there is none in the above example.

Decide how cost codes will work for your business

The above accordion details how cost codes interact and work with each other but let's now look at how they can work for your business. 

Cost codes can be set in 4 places; positions, shifts, days, and rosters. Let's take a look at some real examples highlighting some of the ways that they can be used. 

Roster

A cost code can be specified on the roster but if none is selected, the roster name will be used as a cost code. This is the base-level costing and will be used when an employee works on a roster if nothing else is selected. 

Below are some examples of how this can be used.

  • A licensed club is set up with a roster per area (e.g. Kitchen, Bar 1, Bar 2, Outdoor Dining, Indoor Dining, etc). Cost codes have been added to each roster based on the group (i.e. both bar rosters have 'Bar' as their cost code). When their employees work across the different grouped rosters, they are costed based on the job they are doing (e.g. 'Bar'), not the specific roster they are working. 
  • An NDIS service provider has a roster per client. The roster name is the client's name so that their employees know who they will be working with. The cost code assigned to each roster is the NDIS Number for the specific client. 

Day

A cost code can be applied to a day of any roster. A day cost code will be applied to all shifts for the day and the roster it was added to. This cost code will append to or override the roster cost code. 

Below are some examples of how this can be used. 

  • A racing club is set up with roster for different departments and areas (dining, bar, track, etc). They are open 7 days but their races are primarily on weekends with larger events held periodically. Their race days are costed separately through day costing and the event name is appended to the roster code. 
  • A catering company has a roster configured per client. This company has a lot of repeat business through their clients. They use day costing to specify the purchase order (cost code) for each job for their clients. 

Shift

A cost code can be applied to individual shifts on any roster. Multiple cost codes can be assigned to a single shift too. This means that you can split the cost of your shift across several codes if required. As the shift cost code is higher in the hierarchy, it will take preference over the day and roster cost codes.

Below are some examples of how this can be used. 

  • A labour hire business works primarily with different government departments for jobs that last up to a couple of weeks. The roster is set up as the government department and the job number is applied as a cost code to the individual shifts. This allows a single roster to be used for the department or job site but different cost codes to be applied depending on the job. 
  • A licensed club rosters their employees where they will start their shifts. When things get busy, employees will often be moved to a different area. After a shift, multiple cost codes are applied to a single shift in the Approved Shifts menu. This allows the shift to be costed accurately to what was worked across the different areas.

Position

A cost code can be applied to a position on an employees profile. Position cost codes are above both shift & roster in the hierarchy so will take preference over everything. 

Below are some examples of how this can be used.

  • All the employees working in the head office of a healthcare provider are paid as salaried employees. A cost code is assigned to each persons position based on the department they work in. These employees are not rostered but the cost code assigned to their position is used for them. 
    Note: Salaried employees should have a cost code assigned to their position as rostering them will not affect the cost code that is used. 
  • A licensed club has cost codes set to append on the positions of their duty managers. When their managers are rostered, the position cost code is added to the end of the roster cost code. 

Managing Cost Codes

Access the Cost Code library

The cost code library can be accessed from the main menu > Payroll Settings > Cost Code Library

From within the cost code library, you can view and manage your cost codes. This includes adding new, editing, or deleting existing cost codes. 

Add cost codes to your library

Cost codes can be added to your cost code library from anywhere in the platform that allows the selection of a cost code. However, the primary location to add & manage your cost codes will be the Cost Code Library itself.

Cost Code Library

To add a new cost code to your cost code library:

  1. Navigate to Payroll Settings > Cost Code Library.
  2. On the right, select + Cost Code.



  3. Enter the name of your cost code.


    • As you are entering your cost code, the field will search your existing cost codes. If you find that the cost code you're attempting to add already exists, you can edit it instead. See the below section for editing options.
  4. If your cost code can be used across all operations, leave the toggle Apply to all operations on. Skip ahead to step 6.
  5. If your cost code is only available for use in certain operations, turn the Apply to all operations toggle off. 
    • With the toggle disabled, click into the operations field and type to find your desired operations.
    • Select each operation that the cost code applies to. 

  6. Save your selections at the bottom.

Cost code selection

When selecting a cost code anywhere in the platform, if the cost code does not exist, you will have the option to create a new one. 

  Note: If you create a cost code in this way, it will flow back to the cost code library. Depending on where you create the cost code will determine which operations it is available to.

  • Roster - The cost code will be added and applied to the operation that the roster belongs to.
  • Approve shifts - The cost code will be added and applied to the operation that the shift was rostered to. 
  • Payslip - The cost code will be added and applied to the operation the pay item is attributed to. 
  • Employee position - The cost code will be added and applied to all operations.  
  • Invoice - The purchase order will be added and applied to the operation that is being sent the invoice.
Edit cost codes

The editing of cost codes will be done from the Cost Code Library. There are two types of edits that you may be looking for.

  • Editing the operation/s that a cost code can be used with.
  • Editing the title of the cost code.

Operations

  1. Navigate to Payroll Settings > Cost Code Library.
  2. Click the ellipsis to the right of the cost code you're looking to edit then select edit.



  3. Add or remove operations as required. 
  4. Once you've made the desired changes, click Save.

Cost code title

It's not possible to edit the title of an existing cost code regardless of whether it has been used or not. Instead of editing the title, the recommendation would be to:

  1. Create a new cost code with the correct title. Refer to the above accordion. 
  2. Update any rosters or positions using the old cost code, replacing them with the new one.
  3. Delete the old cost code. This will help to ensure that the incorrect one is not selected accidentally. Refer to the below accordion.
Removing cost codes

When referring to removing cost codes, there could several places you may want to remove them from.

  • Cost code library - This will delete the cost code so that it cannot be used within the platform (unless re-added).
  • Use within an operation - To remove the cost code from one or more operations whilst still keeping it active for use elsewhere, refer to the Edit cost codes accordion above.
  • From a roster - A roster will always be used for costing unless overridden by shift or position codes. If no cost code is present on the roster, the roster name will be used. 
  • From a shift - Removing a shift cost code will mean the roster code is used. 
  • From an employee position - A cost code on a position can be set to override, fallback or to append to a shift or roster cost code. It can be removed from the position which will then mean the shift or roster cost code will take preference. 

Cost code library

To remove a cost code from the cost code library:

  1. From the main menu, navigate to Payroll Settings > Cost Code Library.
  2. Locate the cost code you'd like to delete.
  3. Click the ellipsis to the right of the cost code and select Delete.


Roster

To remove a cost code on a roster:

  1. Navigate to Work > Rosters
  2. Locate the roster & click the settings icon next to it.




  3. Click into the cost code field and remove the content



  4. Enter in a new cost code or leave it blank.
    • Rosters without a cost code specified will use the roster name instead.
  5. Continue through the edit roster menu and Save

Shift

To remove a cost code from a shift:

  1. Navigate to the roster containing the shift.
  2. Double-click the shift to edit it.
  3. Click on the cost code section.



  4. Set the number of cost codes to 0.
  5. Save your shift. 

Employee Position

To remove a cost code from an employee position:

  1. Navigate to the employee profile > Employee Card > Employment type.
  2. On the position, click the edit icon under the Cost Code.



  3. Either change the cost code to something different or change the top drop-down option to No.


Application of Cost Codes

Cost code per Roster

Roster cost codes are the base level for costing. If no other cost code is applied, the roster will be used. A cost code can be applied to a roster or, if none is specified, the roster name will be used as a cost code. 

To assign a cost code to a roster:

  1. Navigate to Work > Rosters.
  2. Select the settings icon next to the roster. 



  3. Add the cost code into the Cost Code field. If this field is blank the roster name will be used. 



  4. Continue through the edit roster menu and Save. 
Cost code per day

Cost codes can be applied on a per-day basis which will append to or override the cost code set on the roster. 

To assign a cost code to a day:

  1. Navigate to Work > rosters > and open the roster you're working with. 
  2. At the top of the roster, select the ellipsis next to the day you're wanting to edit. 
  3. Select + Day cost code.



  4. Enter the cost code into the cost code field. 
  5. Select whether the day cost code should override or append to the roster cost code.
  6. Save changes. 

Cost code per shift

Cost codes can be applied on a per-shift basis which will append to or override the cost code set on the day and roster. Multiple cost codes can be added to a single shift either on the roster or in Approve Shifts. 

You can read more about shift costing here

Cost code per employee and position

A cost code can be set up for each position assigned to an employee. This cost code will append to or override the cost code set on the shift, day, and roster. 

To assign a cost code to a position:

  1. Navigate to the employee profile > Employee Card Employment Type.
  2. Click the edit icon next to Edit Cost Code Settings under the relevant position.



  3. Then select the desired Cost Code and the preferred option for how the cost code will behave. 
    • Fall Back - Cost code will be used if one does not exist elsewhere. 
    • Override - This cost code will be used regardless.
    • Append - Adds the cost code to any existing ones (e.g. roster - position).

 

Cost codes for salaried employees

If your business has salaried employees you will need to decide how they are to be costed. 

Unlike other employment types, salaried employees can only be costed based on their position. The costing of a salaried employee position does not change when they are rostered either.  

If this is suitable, please refer to the steps laid out in the 'Cost code per employee and position' accordion above. 

Note: In the case of a salaried employee, all options (fallback, append, override) will behave the same and the cost code assigned to the position will be used regardless. 

If you need to cost them across multiple cost codes, there are two options:

  • Edit the payslip and adjust the cost code for the required hours.
  • Use a flat rate position configuration instead of a salaried one. 

The use of a flat rate position is often preferred to editing payslips as the less manual intervention at the payroll stage, the less likely errors will occur. If you're interested in this setup, please reach out to us to discuss your requirements

Reporting

Reporting

Reporting is the primary function of cost codes! Cost codes can be added as a grouping or included in many of the financial reports in your platform. Some of the common places you'll find and use them are:

  • Advanced payroll report
  • Labour management report
  • Leave paid report

 

You may also want to report on where your cost codes are assigned. Depending on where the cost codes are assigned will determine the report you use.

Employee positions

  1. Navigate to People > Approved People.
  2. Select Bulk Actions > Export All Filtered
  3. Deselect all & reselect the fields you're interested in. At a minimum, you should include Employee ID, Employee Name, and Cost Code. 

Rosters

  1. From the main menu, navigate to Integrations > CSV Import.
  2. Select Shifts from the drop-down and click Export Rosters.
  3. The resulting CSV will list all rosters in your platform and also what cost code is assigned to them.