Business Central Allocation Account: Auto-Split Costs to Departments Without a Journal

You post the electricity bill to one expense account. Then at month-end, you do a journal to move the cost to each department. Every month, the same thing.

You can stop doing that. Business Central can split the cost for you when you post the purchase invoice, using an Allocation Account.

Quick answer

• Set up an Allocation Account once, with your split (e.g. 50% / 20% / 30%) and the department for each share.
• On the purchase invoice line, choose it in the Allocation Account No. field.
• Post. BC splits the amount to each department automatically. No journal needed.

Before and after

Before: every month ▼ Post purchase invoice full amount to one account ▼ Create a journal reclass the cost to each department ▼ Cost split (and repeat next month)

After: Allocation Account ▼ Post purchase invoice Allocation Account No. = UTILITIES ▼ Cost split to each department ✓ Done

Step 1: Set up the allocation account (one time only)

1. Search Allocation Accounts → New.
2. Fill in No. and Name, e.g. UTILITIES.
3. Set Account Type = Fixed and Document Line Split = Split Amount.
4. Add one line per department. Set Destination Account Type = Inherit from parent and leave Destination Account Number blank.
5. Enter the Share for each line, e.g. 50, 20 and 30. The Percent column fills in by itself.

6. Select the first line and choose Dimensions. Add DEPARTMENT = ADM, then close.
   ADM is just for illustration. Use any department in your company that should take this share.
7. Do the same for the other two lines, each with its own department.
8. Optional: choose Test Allocation and enter an amount to see how it splits.

Good to know

• Why leave Destination Account Number blank? Inherit from parent means "use whatever G/L account is on the invoice line". So one UTILITIES key works for electricity, water and internet, and each cost stays in its own expense account.
• Shares don't have to add up to 100. Enter floor area (e.g. 500, 200, 300 sq ft) or any ratio, and BC works out the percentage.

Step 2: Use it on the purchase invoice

1. Enter the line as usual: Type = G/L Account, No. = your expense account (8120 Electricity and Heating in this example), and the amount.
2. In Allocation Account No., choose UTILITIES. Can't see this column? Use Personalize to add it.
3. Leave Department Code on the line blank. The allocation account fills in the department.
4. Post as normal.

For the 6,840.00 electricity bill in this example, BC posts:

G/L Account	Department	Share	Amount
8120	1st department	50%	3,420.00
8120	2nd department	20%	1,368.00
8120	3rd department	30%	2,052.00
Total			6,840.00

Want to check the split before posting?

• Functions → Generate lines from Allocation Account Line replaces the line with the three actual lines. Handy when someone needs to review or approve the invoice first.
• This bill needs a different split? Choose Functions → Redistribute Account Allocations and change it for this invoice only. Your setup stays the same.

✓ Done. Next month, just choose UTILITIES on the bill. No more reclass journal.

FAQ

Can I use this on sales invoices and journals too?

Yes. Allocation accounts work on sales documents, purchase documents and general journal lines. In a general journal, set Account Type = Allocation Account, or keep G/L Account and fill in Allocation Account No.

One insurance invoice covers two expense accounts. Can I split it?

Yes. Create an allocation account with Destination Account Type = G/L Account and enter each account with its share. On the invoice line, set Type = Allocation Account and choose it in No.

My split changes every month (headcount, floor area). Do I have to update it every month?

No. Use Account Type = Variable. It reads the numbers from a statistical account (e.g. headcount per department) for the period you choose.

Can I use it in Recurring General Journals?

No. The Allocation Account option shows up there but isn't supported. Use the recurring journal's own Allocations action instead.

Can I split a cost between two companies?

No. Allocation accounts split costs within one company only. Use intercompany postings for that.

We used allocation accounts in Dynamics GP. Is this the same?

Very similar. Fixed works like a GP fixed allocation account, and Variable with statistical accounts works like GP's variable allocation account.

I can't find Allocation Accounts in my BC.

Allocation accounts arrived in Business Central 2023 release wave 2 (version 23), and some options came in later updates. If you're on an older version, you won't see them.

Stuck somewhere? Drop a comment below — happy to help.