How to Set Up and Use Allocation Groups in Business Central
Distribute costs across departments automatically using allocation accounts and rules in Business Central.
Allocation accounts in Business Central let you distribute costs across multiple G/L accounts automatically. Instead of manually splitting a journal entry by department or cost center, you define the rules once and Business Central applies them on every posting.
Common use cases include:
- Splitting rent across departments
- Allocating IT expenses
- Distributing overhead costs
Step 1: Create an Allocation Account
- Open Chart of Accounts.
- Create or identify a G/L account used for allocations.
- Set the account type to Allocation.
This account will contain the allocation rules.
Step 2: Configure Allocation Lines
Open the allocation account and define the distribution rules.
Each line includes:
- Destination account
- Percentage or amount
- Optional dimension values
Example:
| Destination Account | Allocation |
|---|---|
| Department A | 50% |
| Department B | 30% |
| Department C | 20% |
Step 3: Add Dimensions
Dimensions allow allocations to follow organizational structure.
Examples:
- Department
- Project
- Cost center
These dimensions improve reporting and financial analysis.
Step 4: Post Transactions
To use the allocation rules:
- Create a line in General Journal.
- Use the allocation account.
- Enter the total amount.
When the journal posts, Business Central automatically creates the distributed entries.
Step 5: Review the Result
After posting:
- Open General Ledger Entries.
- Locate the original entry.
- Review the generated allocation entries.
Each destination account receives its share according to the allocation setup.
For other finance setup guides, see How to Set Up and Configure Reminders in Business Central.