Fair Distribution of Shared Costs

This service creates cost allocation frameworks that distribute shared expenses fairly across your departments or business units. Rather than arbitrary percentages or outdated formulas, you'll have allocation methods grounded in appropriate cost drivers that reflect actual resource consumption patterns.

You can expect allocation models designed collaboratively with your stakeholders, implemented within your existing accounting systems, and documented with clear methodology explanations that anyone in your organization can reference and understand. Annual reviews ensure the allocation approach remains equitable as your organizational structure and operations evolve.

Beyond the technical deliverables, this work brings fairness and transparency to departmental financial reporting. When shared costs are allocated using defensible methods, department heads focus on managing their controllable expenses rather than arguing about allocation fairness. Budget discussions become more productive when everyone understands how shared costs are distributed and why.

We begin by understanding which costs your organization needs to allocate and to whom. Through stakeholder conversations, we learn about your organizational structure, shared service arrangements, and any existing allocation approaches. We also discuss what's been working and what concerns people have about current methods.

For each category of shared costs, we identify appropriate allocation drivers based on actual resource consumption patterns. IT costs might allocate based on user counts or device quantities, facilities costs based on occupied square footage, administrative support based on headcount or transaction volumes. The drivers selected should be measurable, defensible, and reasonably stable over time.

What makes this approach effective is stakeholder involvement in the design process. When department heads participate in selecting allocation drivers and understand the rationale, they're more likely to accept the results even when allocated costs are higher than they'd prefer. Transparency about methodology builds trust that allocation is fair, even if not everyone loves their share.

We document the complete methodology in plain language, explaining which costs are allocated, the drivers used, calculation formulas, and the rationale for each approach. This documentation serves as reference when questions arise and as training material for new managers. Annual reviews ensure allocation methods adapt when your organization changes significantly.