Allocating expenses

  • Release version: Australia
  • Updated March 12, 2026
  • 2 minutes to read
    • Summarize
    Summarized using AI
    This content was generated using new OpenAI-powered functionality. Results are provided on an as is basis and are not guaranteed to be accurate or complete.

    Summary of Allocating expenses

    Expense allocation in ServiceNow allows you to assign expenses to the responsible business entity without performing charge-back or billing directly. This helps represent the consumer of the process incurring the expense and can serve as a source for future billing processes. Expense allocation rules define how expenses are distributed among business units or cost centers.

    Show full answer Show less

    Key Features

    • Expense Allocation Rules: Define how expenses are allocated based on criteria such as expense source or business service consumption.
    • Simple Allocation Example: Assign every server-related expense to the server’s responsible department by creating a rule that allocates 100% of the expense to that department.
    • Complex Allocation Example: Allocate business service costs to multiple cost centers based on their consumption levels, using unit counts to calculate proportional expense shares.
    • Use of Allocation Units: Represents service capacity or consumption units (e.g., number of supported locations) to distribute service expenses fairly among consuming cost centers.
    • Cost Center Relationships: Track which cost centers consume the business service and how many units each uses to calculate expense allocation percentages.
    • Advanced Allocation Logic: Script-based rules (e.g., Process Svc-CC Relationships) enable complex allocation scenarios such as distributing business service expenses to cost centers based on usage.
    • Expense Allocation Visibility: Add the Expense Allocation related list to expense forms to view how expenses are allocated across business units or cost centers.

    Practical Application for ServiceNow Customers

    By implementing expense allocation rules, you can accurately assign expenses to the appropriate business entities responsible for incurring them, improving financial transparency and accountability. This enables better financial management by showing the true cost consumers of IT services or other business processes, which can be used as a foundation for internal charge-back or billing mechanisms.

    Customers managing server expenses can assign costs to departments responsible for those servers, while those managing broader business services can allocate expenses proportionally to multiple cost centers based on actual service consumption, supporting more granular financial tracking and decision-making.

    Expenses can also be allocated to a business entity that is responsible for the expense.

    This is not considered charge-back or billing but could be used as a source for billing. The primary purpose of expense allocation is to represent the consumer of the process that has incurred some expense. This can be accomplished by defining expense allocation rules.

    Simple Example

    This example demonstrates allocating every server-related expense line to the department responsible for the server.

    To view the example:
    1. Navigate to Financial Management > Expense Allocation Rules.
    2. Remove the list filter to view inactive rules as well as active ones.
    3. Select the Server - Department rule.

    The rule states that for every expense line associated (Expense source field) with a server that has one of the selected statuses, generate an expense location record for 100% of the expense amount and assign the allocation to the server's department.

    To view expense allocations, add the Expense Allocation related list to the form. The Target field is the business unit that the expense is allocated to.

    Complex Example

    A more common example would be to allocate the costs of a business service to the business consumers. Since cost centers are generally used when referring to business finances, this example allocates business service costs to each cost center that is consuming the service and bases the amount allocated on the amount of the service the cost center consumes.

    To view the example, navigate to Financial Management > Business Services and select Retail. Switch to the Cost view to gain access to additional related lists.

    The Allocation Units record defines the amount of capacity that this service provides. In this case, the Retail service can support 50 locations (units), of which 45 are allocated. A unit is a generic concept that can represent something that makes sense for that business service. This record uses units to represent allocation. The objective is to use the unit count and the cost center unit count to determine a percentage of total to calculate the allocation amount.

    The CI Cost Center Relationships list shows which cost centers are using the service and how many units they are using. This information is used to determine how much of the service expenses to allocate to each cost center. For example, the Trading department is using 10 of the 50 allocated units, so they will be allocated 20% of all Retail expenses. There's also an option to allocate based on the total (10 or 45).

    To see how the expense lines are allocated, select an entry in the Expense Lines related list and add the Expense Allocation related list to the Expense Line form.

    The following is an expense from the dbaix901nyc server for $2,500. Two expense allocations are generated from the expense. The Trading cost center was allocated $500 (20%) of the expense based on the CI cost center relationship seen earlier.

    This type of business-service-to-cost-center allocation is accomplished through the Process Svc-CC Relationships expense allocation rule. This is an advanced rule that uses script to determine the allocation logic.