About Organizational Profitability

Use the Organizational Profitability page in Axiom Financial Institutions Suite to load data, configure organizational allocations, and view organizational profitability reports. Organizational allocations allow for the allocation of expenses across departments. For example, you can allocate the cost of salaries and benefits within your HR department to all the departments that HR supports. You can also set up an allocation to spread salaries of C-level executives across branches or departments based on where they spend their time. Organizational allocations are set up by defining where costs originate, where they should be allocated, what basis to allocate them, and the sequence in which to process them. Allocations are defined in the Add or edit allocations page and processed via the Process allocations page.

You can also use the Organizational Profitability page to populate the Management General Ledger (MGTGL) reference table, which stores post-allocation charges and offsets.

NOTE: Typically, expenses are allocated; however, you can also use the Cost Allocation Engine to allocate income and balances.

The Organizational Profitability page is accessed via the Command Center. You can click the Organizational Profitability link in the Profitability section, or click the arrow to expand the section and then click the desired sub-section,

For details on using the Organizational Profitability features, see the following topics:

About cost allocation rules

Before you create allocations, it is important to understand how Axiom Financial Institutions Suite defines a cost pool. A cost pool is a collection of individual costs that are grouped by department, GL account, and data type. You can then allocate cost to other departments.

Cost allocation rules define:

  • Cost pools
  • Target departments
  • Order in which costs are allocated
  • Other information to crate instructions for allocating costs

Cost allocation rules contain the following definitions:

  • Costs to be allocated (cost pool)
  • List of target departments to receive allocated costs
  • How the costs will be allocated
  • Target allocation and allocation offset GL accounts

TIP: Before creating allocations, you must first add allocation accounts to the Account dimension. Allocation accounts are only used for allocation records and are populated by the Cost Allocation Rule Manager utility. These accounts do not exist in your GL chart of accounts. As a best practice, create a new numbering sequence for these accounts to differentiate them from your native GL records (for example, start the account number with 999).

Cost Allocation Engine

The Cost Allocation Engine utility is an Microsoft Excel-based Axiom utility that processes organizational cost allocations. The Cost Allocation Engine uses allocation rules, which contain business logic, to direct the system on how to process allocations. These rules must be defined in the Cost Allocation Rules Manager before any allocations can be processed. Use the Organizational Profitability page to process allocations and to review the calculations used by the Cost Allocation Engine.

NOTE: While the Axiom Financial Institutions Suite can allocate both expenses and income, the term cost pool is used throughout this documentation and for descriptions within the utilities because most allocations are related to expenses. However, you can also use the same steps to set up income allocations for income pools.

Management General Ledger (MGTGL) table

The MGTGL table stores data that is typically not included in the General Ledger (GL), including Funds Transfer Pricing (FTP) and similar adjusting entries for management reporting purposes. The Cost Allocation Engine posts the following to the MGTGL table:

  • Allocated expense entries to the target departments, by allocation ID
  • Summarized cost allocation offsets to the allocating departments

Use the Load Data tab to populate the MGTGL table by copying over the native GL entries from the GL table.