European Financial and Accounting Journal 2011, 6(4):49-59 | DOI: 10.18267/j.efaj.19

Sharing Cost of Shared Services Centre

Tomáš Buus
Ing. Tomáš Buus, Ph.D. - Assistant Professor; Department of Corporate Finance and Valuation, Faculty of Finance and Accounting, University of Economics, Prague, W. Churchill Sq. 4, 130 67 Prague 3, Czech Republic; <buust@vse.cz>.

In the presented paper we develop model of apportionment of cost generated by variability and mean value of flows from (to) shared services centre. It can be either cash pool or distribution centre, or even some kind of customer service centre. The apportionment formula for the cost of capacity generated by flow variability turns out to be regression coefficient of flow to (from) the distribution centre (cash pool) generated by particular company within the multibusiness enterprise as endogenous variable to flow of inventory (cash) for the whole distribution centre (cash pool) as exogenous variable. The cost generated by the flow of requirements (goods, money) itself, i.e. by the mean value of the flow, has to be split between SSC customers according to their share on that flow. Result does not depend on the form of cost function as long as it is strictly increasing function of flow from (into) SSC (orders, stock, cash) and of mean of that flow.

Keywords: Capacity, Cash Pool, Cost Attribution, Distribution centre
JEL classification: C61, G39, M21

Published: December 1, 2011  Show citation

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Buus, T. (2011). Sharing Cost of Shared Services Centre. European Financial and Accounting Journal, 6(4), 49-59. doi: 10.18267/j.efaj.19
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