An internal order collects cost for a specific purpose or event. Where a cost centre corresponds to a standing part of the organisation, an internal order corresponds to an activity with a beginning and an end.
When to use one
Use an internal order when cost centres alone cannot give you the cut you need.
| Use | Example | Question answered |
|---|---|---|
| Event costing | Trade show, campaign | What did this event cost in total? |
| R&D tracking | Research by theme | How much went into this theme? |
| Maintenance | A major overhaul | What did this repair cost? |
| Capital projects | Equipment investment | Accumulated cost to completion, later capitalised |
| Cross-department initiatives | Process improvement work | Total spend across several departments |
What these share is an activity that spans departments or periods and needs to be seen as one number. Trade show costs arise in both sales and marketing; by cost centre they are scattered, and an internal order pulls them together.
Real and statistical orders
Internal orders come in two kinds, and the distinction shapes how CO behaves.
| Aspect | Real order | Statistical order |
|---|---|---|
| Who bears the cost | The order genuinely carries it | The order only records it for information |
| Settlement | Required โ the cost must move on | Not applicable |
| Simultaneous assignment | A cost centre can only be statistical | A cost centre can be the real object |
| Suited to | Capital projects, anything later capitalised | Simply adding an extra reporting dimension |
One rule underpins this: a transaction has exactly one real cost object. If you assign a real order, any cost centre assigned alongside is recorded statistically. With a statistical order it is the other way round โ the cost centre is real and the order runs in parallel for analysis.
Order types
An order type governs the number range, whether orders are real or statistical, the settlement profile, whether budgeting applies, and the screen layout.
Define one order type per purpose โ events, capital projects, R&D โ which also makes reporting easier to filter.
Settlement
Cost collected on a real order has to go somewhere in the end. That is settlement. An internal order is a staging point, not a resting place.
| Receiver | When used |
|---|---|
| Cost centre | Fix event cost as an expense of the owning department |
| Fixed asset | Capitalise accumulated cost of a capital project |
| G/L account | Transfer to a particular expense account |
| Profitability segment (CO-PA) | Reflect promotional spend in the margin of the products concerned |
| Another internal order | Roll up into a larger order |
Rules come from the settlement profile, attached to the order type, which limits valid receivers, and the settlement rule on each order, which names the actual receiver and the split. Run settlement with KO88 for one order or KO8G in bulk.