Cost centre

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Cost centres are divisions that add to the cost of the organisation, but only indirectly add to the profit of the company. Examples include Research and Development, Marketing and Customer service. A cost centre is often identified with a speed type number.

Because the cost centre has a negative impact on profit (at least on the surface) it is a likely target for rollbacks and layoffs when budgets are cut. Operational decisions in a contact centre, for example, are typically driven by cost considerations. Financial investments in new equipment, technology and staff are often difficult to justify to management because indirect profitability is hard to translate to bottom-line figures.

Business metrics are sometimes employed to quantify the benefits of a cost centre and relate costs and benefits to those of the organisation as a whole. In a contact centre, for example, metrics such as average handle time, service level and cost per call are used in conjunction with other calculations to justify current or improved funding.

[edit] Speed type

A number which identifies a cost centre or an organisation like a company of a university. This number is often used in expense forms.