The bottom line in your income statement tells you whether the company as a whole makes money — but not which job feeds you and which quietly drains you. That answer comes only from tracking costs by cost centre and job: assign each job its revenue and its costs, and you see its real contribution to profit. Without it, you are deciding blind.
Why does total profit tell you nothing about individual jobs?
A standard set of accounts tracks costs by type — wages, materials, energy, services. That is enough for a tax return, but it does not tell you how much of those wages and materials a specific job consumed. A company can report a healthy overall profit even though half of its jobs lose money and the other half subsidise them.
Example: a construction firm with 1.2 million EUR in revenue ends the year 60,000 EUR in profit. Broken down by job, three large projects earned 140,000 EUR while a dozen small jobs together lost 80,000 EUR. Without this view, the firm would keep taking on exactly those small, loss-making jobs.
What is a cost centre and a job in accounting?
A cost centre is an organisational part of the company whose costs and revenue you track separately — a branch, an operation, a production line, a team. A job (sometimes a “project”) is a specific commercial case: one building, one delivery, one client. Accounting software lets you tag every document with both a cost centre and a job, so the same material invoice is attributed to a specific project. Slovak clients can read more in our note on professional accounting in Slovakia.
As a result you can produce an income statement for a single job or a single cost centre at any time — a mini profit-and-loss that shows whether that part of the business earns.
How to assign direct and indirect costs?
Direct costs can be attributed to a job unambiguously — material used on site, wages of the people who worked on it, subcontractors. Assign these when you book the document. The challenge is indirect (overhead) costs — office rent, accounting, marketing, the manager’s salary — which serve all jobs at once.
Overhead has to be allocated to jobs using a sensible key: by hours worked, by share of revenue, or by direct costs. The key must be simple and stable — otherwise no one will take the numbers seriously.
How to calculate a job’s real profitability?
Start with the contribution margin: a job’s revenue minus its direct costs. This shows how much the job “contributes” toward covering overhead and profit. Only then subtract the allocated overhead to get the job’s net profit.
Example: a job has revenue of 20,000 EUR and direct costs of 13,000 EUR, giving a contribution margin of 7,000 EUR. Allocate 4,000 EUR of overhead and the net profit is 3,000 EUR, a 15 % margin. If direct costs rose to 16,000 EUR, the 4,000 EUR contribution would barely cover overhead and the job would effectively break even.
What tools do you need for this?
To start, disciplined use of cost centres and jobs directly in your accounting software plus a simple monthly overview in a spreadsheet is enough. More important than an expensive tool is discipline: every document must be tagged with its job when it is booked, not retrospectively at year-end.
Larger firms add time tracking on jobs so they can allocate labour costs precisely. What matters is that the numbers arrive on time — a report for a closed month by the middle of the next one, not with a six-month delay when nothing can be changed.
What mistakes do firms make when tracking job profitability?
The most common is watching only a job’s revenue and forgetting its costs — a “big job” is not necessarily a profitable job. The second is not allocating overhead at all, so every job looks more profitable than it really is. The third is changing the method every month, so the numbers cannot be compared over time.
A company that avoids these three traps gains a simple but powerful tool: it knows which jobs, clients and cost centres to grow and which to decline or reprice. That is the difference between growing revenue and growing profit. For the tax side of those decisions, our overview of Slovak tax advisory for companies is a useful companion.
Want to know which of your jobs actually earn and which cost you money? We will help you set up cost tracking by cost centre and job.
FAQ
What is the difference between a cost centre and a job?
A cost centre is a permanent organisational part of the company — a branch, an operation, a team — whose costs and revenue you track separately. A job is a specific commercial case, such as one building or one delivery for a client. You can tag every document with both, so you can evaluate the profitability of a branch and of an individual project.
How do I allocate overhead to individual jobs?
Split overhead — rent, marketing, administration — using a simple and stable key, most often by hours worked, share of revenue, or direct costs. Do not change the key every month, so the numbers stay comparable. The goal is not perfect accuracy but a reasonable, consistent picture.
Is ordinary accounting software enough to track job profitability?
For most small firms, yes. Common accounting programs let you tag every document with a cost centre and a job and build an income statement per project. What matters is discipline in data entry and a timely monthly report; a dedicated, expensive tool is needed only by firms running dozens of simultaneous jobs.