How to Process Chargebacks › Department Recovered Costs

Department Recovered Costs

A recovery statement tells departments how much of their incurred costs can be recovered from the departments who benefited from services provided. A recovery statement is similar to a company income statement—only for departments.

Incurred costs are charged to the departments that receive services. Department managers can view their charges from an invoice.

Only departments that provide services can view department recovery statements. The following must be set up:

• Services must exist and be associated with the department.
• At least one department must subscribe to at least one service offered by the provider department.
• Debit rules must exist for services. Contact the service manager to create debit rules for the service.
• Credit rules must exist.
• Users must be granted rights to view recovery statements.

Recovery statements are generated with invoices during scheduled runs of the Generate Invoice job.

Example: IT Departments Aren't Cost Centers Anymore

Forward Inc offers its business units a wide variety of IT supporting services, including email support, desktop support, and network support. The services are vital for each business unit to maintain their lines of business. Each of these departments are charged for those services. Each department that delivers services receives credit for work performed.

Approved Invoices Charge Costs to Departments that Benefit from Services

Department invoices are generated, reviewed, and approved on a quarterly basis by the departments that benefit from services delivered to them. Corporate Human Resources has subscribed to several IT services and has agreed to accept charges for a portion of these services. The Human Resources department has approved an invoice that totals $7,400.

Charged Costs Translate into Credit for Departments that Deliver

The IT Delivery Services department receives credit for services provided. The department manager can view incurred costs and credits by viewing the department recovery statement. This statement shows that some charges were approved and the department has recovered $7,400 so far. Other department managers have yet to approve their charges. The charges appear as recovery variance.