Explanation for Business Humans in One Sentence
- Cost tracking is the regular recording and monitoring of costs and expenses to understand how much money you are spending and on what.
The Importance of Cost Tracking for Your Small or Growing Business
Cost Tracking is the process of recording and monitoring the actual costs or expenses associated with your assets, equipment, tools, machinery, projects, orders – basically, anything your business uses. This allows you to see the true costs (typically labor, materials, and outsourced services) and their amounts related to each item. Business costs typically come from employee wages, materials used, or services bought from outside vendors. For business assets like machinery, tools, and buildings, costs are mostly tied to their operation and upkeep, often including expenses for routine maintenance or necessary repairs. When working on projects or customer orders, we track the expenses related to getting them done. Keeping track of these costs helps you stay within your planned budget.
- A process where you record your actual expenses for a specific item or activity.
- Then, you compare these actual costs to your planned budget.
How Does Cost Tracking Work?
1. You Log Individual Costs or Expenses
- You systematically log every expense or cost.
- You enter these details in the expense records, typically found under the "Expenses and Consumption" tab.
- You categorize costs based on your specific needs, usually into three core types: labor, materials, and external services.
2. You Monitor Your Actual Spending
- Once you log a cost in the system, you gain an online overview of your total costs for a specific period.
- If you set a budget, you can easily track your actual spending against it.
- You can track costs and make informed operational decisions based on this data.
What Types of Costs Are Most Commonly Tracked
You can track and record anything related to a specific asset (like equipment or property) or a project/job, by assigning a financial value to it. You track this based on what makes sense for your business and what your existing systems allow. Either the cost is already a fixed financial amount (like a subcontractor invoice), or you calculate the financial amount by multiplying the unit price by the quantity (for example, the number of hours multiplied by the hourly rate). It always depends on the information you have available from your operations or your financial system.
Labor Costs
- You track labor costs by consumed time, most commonly in hours, days, or minutes.
- Actual costs are usually a multiple of the time unit and the unit labor rate.
- It depends on how you calculate the unit of time (typically, it's the sum of payroll costs).
Material Costs
- Costs for consumed material are also typically tracked by quantity, multiplied by the unit price.
- Material units are entered in pieces, liters, kilograms, or other physical units.
Subcontractor and Service Costs
- Subcontractor costs are most often expressed as the total financial volume of the subcontract or purchased services.
- Typically, this corresponds to the invoiced amount for contractors, subcontracts, and similar.
- You track and enter amounts from invoices.
Energy & Utility Consumption Costs
- Costs for consumed energy are less frequently tracked in practice because they are often indirect.
- When tracking energy consumption costs, you enter the unit and multiply by the unit price.
- However, you can also enter just the total financial amount for energy, if you know it.
Overhead Costs
- Sometimes it's also necessary to track other operating, overhead costs, which are typically indirect.
- If you know the amount or another unit and can allocate it to an asset, you enter it.
What Key Metrics Do Businesses Track Beyond Just Costs?
Tracking costs often goes hand-in-hand with tracking other key operational data, such as consumption and utilization. All these metrics help businesses better understand their operations and improve cost efficiency. It's a similar process: monitoring, recording, and analyzing data generated during the use of various assets – like machinery, vehicles, tools, buildings, or other equipment. For small and medium-sized businesses, tracking these metrics helps make better operational decisions by capturing:
🚗 Equipment Usage & Condition
- Mileage (for vehicles)
- Operating hours, engine hours, run time (for machinery)
- Number of cycles or operations
- Tool wear or tool usage rate
- Idle Time
- Wear Level (e.g., for tools or tires)
- Vibration levels (in rotating machinery)
- Fluid levels (oil, coolant)
- Pressure, temperature, humidity – depending on equipment type
- Equipment Utilization Rate (actual run time vs. available time)
🔧 Labor Hours Tracked
- Labor hours spent on repairs
- Labor hours for routine or preventive maintenance
- Inspection and audit records
- Operator training and certifications
- Incidents and accidents related to equipment
⚡ Energy, Fuel, Water, & Gas Usage
- Electricity, gas, water usage
- Fuel usage
- Building heating or cooling energy usage
- Machinery or equipment energy usage
- CO2 emissions
💵 Key Operating Expenses to Track
- Planned maintenance costs
- Unplanned repair costs
- Spare parts and consumables costs
- Technician labor costs
- Total operating costs (including fuel, energy, lubricants)
- External service or contractor costs
📌 Where It’s Used. Cost Tracking Examples
Cost and Usage Tracking is commonly applied to:
- Company Equipment, Tools, and Machinery: Power tools, forklifts, manufacturing machines
- Vehicles and Fleets: Company cars, service vehicles, vans
- Facilities: Office buildings, individual rooms, offices, rental units
- Construction, Installation, or Service Projects: Site costs, subcontractor costs, materials used, tool usage time logs
- IT Equipment and Office Assets: Printers, air conditioners, laptops (if related to energy or usage tracking)
Why It Matters
Tracking both costs and usage helps SMBs:
- Control spending and reduce waste
- Schedule maintenance proactively to avoid breakdowns
- Understand total cost of ownership (TCO) for assets
- Improve budgeting and project profitability
- Make informed decisions about repairs, replacements, or upgrades
How to Record Costs (BETA Feature)
- See our detailed guide on how to track the actual costs of a specific asset, property, or project.
🛠️ How Cost and Usage Tracking Can be Done
In most SMBs, tracking is done using:
- Spreadsheets (manual tracking in smaller teams)
- CMMS (Computerized Maintenance Management Systems) or Asset management platforms, like Aptien
- IoT integrations (for engine hours, energy meters, GPS data, etc.)
- Mobile apps or logs (for field teams to enter usage or costs)