An implementation methodology for development of a 'P&L by Department'

What is it?

"P&L by Destination" is about financial management reporting in companies. The method implements a new, technical way for accurate recording and reporting of complex financial company flows.

Many companies just rely upon totals of period costs and revenues, in combination with some form of cost-of-sales reporting.

Wheras the latter is just a first step towards the explanation of a commercial margin in terms of market characteristics (such as market, customer, product, etc), most forms of reporting lack a clear method for segmenting the overall result towards internal responsibilities.

The segmentation of the overall 'P&L' into sub-P&L's, as well as making available all relevant internal and external parameters for analysis of those sub-P&L's is the objective of "P&L by Destination".

Implementation method

With "P&L by Destination", one tackles the problems which are in the way of correct reporting.

One of the most important problems is the time lag between costs and revenues when reporting profitability.

Our method requires a correct (mostly automated) recording of figures, in combination with automated account determination and derivation of cost and profit carriers. By doing so, we get to a profit and loss statement by department, each one having its own characteristics. Essential to the approach is that each department has its revenues, alongside its costs.

This method is immediately applicable for production and sales companies, but can be extended to many other environments as well.


"P&L by Destination" will split the overall result in sub-P&L's such as:

  • The commercial result
  • The production result
  • The purchase result
  • The logistics result
  • The marketing result
  • The capacity result

Each "P&L sub-result" has its own costs and revenues, which - according the "P&L by Destination" approach are separately posted in legal accounting, and are separately visibily in such a way as to be compliant with general accounting and IFRS accounting rules.