Telecom Expense Management, Mobile Device Management, and Carrier Services Blog

Telecom and Wireless Cost Allocation: What's the Best Method?

Posted by Noel Huelsenbeck on Thu, Sep 11, 2008 @ 06:58 PM

One of the best methods for allocating costs is the employee/site location method. Unlike some other methods of allocating costs, such as by percentage, using the employee/site location method will give you the exact costs for all telecom and wireless services across your enterprise. It will also give you the most flexibility in creating cost allocation reports. The only downside is with tens or hundreds of invoices from which to allocate expenses it can be very time consuming IF you don't have TEM software; you have to maunally enter each line item from an invoice. 

With TEM software- the employee/site location method is not only the best method for cost allocation- it's quick. Additionally, a side benefit of utilizing this method is that by default a validated inventory of all telecom and wireless services will be created. Since all services are tied to active sites and current employees any exceptions will be easily identified. While cost allocation is typically viewed as a function of finance, and inventory a function of telecom/IT, having one application which provides cost allocation AND a validated inventory will be a benefit to both departments.

Lets take a look at some examples of telecom and wireless services that would be allocated to an employee. 

  • Wireless usage, device, plan, contract term
  • Conferencing
  • Calling Cards
  • Cable or DSL Internet connection at employees home
  • Local phone or fax line at employees home

With the employee/site location method of cost allocation all costs for each employee are tagged to that employee. Since each employee is tracked individually you can then group employees and provide detailed reports on their costs to department heads or branch managers. For example you could group all sales people, marketing or engineering into seperate cost allocation reports. Or perhaps personnel from the western, central or east coast regions. The bottom line is once all costs are tagged to each employee you can create an unlimited number of reports. 

The other part of the employee/site location method of cost allocation is tracking expenses for site locations. Once again each line item (line, trunk, circuit, calling feature) and cost is broken out and tagged to a site location. 

You may have mutliple invoices that contain site costs for:

  • Local Phone Service
  • Long Distance
  • Internet Service
  • Data - MPLS, Private line, Frame

Like the employee costs, all site location costs will be seperated and tagged to each site. This will enable you to create cost allocation reports for each location.

Since all of the sites and employees are considered individual components you can also group sites and a list of employees. For instance you could create a report for Site A which would include all of the costs for both the site and the employees at that location.

Until the day comes when one carrier can provide all of your telecom and wireless, and they add Telecom Expense Management Software on top of it, the employee/site location method will provide the best accounting of telecom and wireless spend for your enterprise.  

Topics: invoice cost allocation, site location

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