Cost Recovery

Make sure your organization runs efficiently using Amilia's Cost Recovery tool!

 

Must your organization justify the need for subsidies and sponsorship but unsure of how to establish which programs and services require them? Looking to boost income while minimizing your deficit, without compromising efficiency? Identifying the actual costs of operation and defining cost recovery targets empowers you to make informed decisions regarding fees and allocation of resources where it provides the most value.

 

Amilia's Cost Recovery feature provides:

  • An easy-to-use solution for an effective cost analysis;
  • Real-time data to track how activities are doing;
  • Data visualization to show at a glance how optimized each service category is;
  • Aid in accurately forecasting program costs, duly allocating subsidies and determining minimum participation levels to meet or exceed total expenditures.

 

NOTE: If your organization does not take online registrations through Amilia, you can still reap the benefits of Cost Recovery. Click here to learn more about importing your external data.

 

Getting Started

If you use Amilia for online registrations, you must first:

Your activities and parent facilities in Amilia will auto-populate in Cost Recovery. This enables you to later assign them your service categories and costs.

 

How it Works

1. Glossary

2. Create Service Categories and Target Recovery %

3. Create Direct and Indirect Costs

4. Assign your Categories and Costs to Activities

5. Manage your Cost Recovery Analysis

6. Visualize Statistics on the Dashboard

7. How Cost Recovery is Calculated

 

 

1. Glossary

Here are important terms we'll be using in the context of Cost Recovery:

  • Cost Recovery: A financial technique used in the public sector to identify where subsidies are and should be used. It is obtained by a calculation which returns a percentage indicating how much of your costs are being covered by revenue.
  • Service Categories: Typically represents the services you provide to your clients (e.g. community events, enrichment activities, beginner activities, non-beginner activities, rentals, private/semi-private instruction, special events camps, training sessions, etc.).
  • Target %: Cost recovery percentage to be achieved, within a service category.
  • Cost Recovery %: Actual cost recovery percentage within a service category.
  • Direct Costs: Expenses directly associated to running a specific activity or service. Ask yourself: Is this cost incurred as a direct result of this activity? If the answer is yes, then it is considered a direct cost.
  • Indirect Costs: These expenses are incurred regardless of the existence of an activity or service (as opposed to direct costs).
  • Facility Indirect Costs: A type of indirect cost related to the location(s) used to host your activities/services (e.g. rent, building maintenance, electricity, etc.).
  • Season: Represents a program in Amilia. Programs are broad groupings of activities, classes or events that share certain characteristics, such as registration dates, registration forms and registration confirmation information. Some organizations use programs to delineate sessions (e.g. Summer 2019, Fall 2019, 1st Trimester, 2nd Trimester). Others build programs based on each type of discipline or activity offered (e.g. Aquatics 2019, Summer Camp 2019).
  • Session: Represents an activity's category in Amilia. Categories are used to sort your activities. Examples of categorizing your activities within a program include age group, gender, activity type, level, location, date, etc.  For example, a participant may choose the 1st Trimester 2019 program and select the Arts and Culture category.
  • Service Type: Represents an activity's subcategory in Amilia. Subcategories serve as the final way to sort your activities.  Subcategory names depend on what your category names. For example, a participant may choose the 1st Trimester 2019 program, select the Arts and Culture category and then select the Movement and Dance subcategory.
  • Service: Represents an activity in Amilia. An activity is the name of the activity or service you are offering. For example, a participant may choose the 1st Trimester 2019 program, select the Arts and Culture category, select the Movement and Dance subcategory and then choose the Tap/Jazz Teens activity.

 

 

2. Create Service Categories and Target Recovery %

Establishing service categories and target recovery percentages is the first step in setting up your cost recovery analysis.

NOTE: The Import button is meant for organizations that don't use Amilia for online registrations.  Download the template to view its comprehensive glossary (it provides examples of how to list your service categories and costs) but do not import any data.

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Listing Categories and Targets

Service Categories are used to organize activities that have the same cost recovery goals. The Target % is the percentage of cost recovery to be achieved within the service category.

Via the Cost Recovery subtab:

  • Add a new service category. Include the target % of cost recovery to be achieved within that category. Create as many categories as needed.
  • Edit the Name and Target % at any time by clicking in the desired field.
  • The Cost Recovery column shows you how much cost recovery has been achieved. It auto-updates in correspondence to the net revenue vs total costs incurred within that service category. You do not need to edit this column.
  • Delete a category using the X icon. This removes it from activities it was assigned to.

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3. Create Direct and Indirect Costs

Amilia uses your direct and indirect costs to calculate the actual cost of running an activity in addition to the percentage of those costs being covered by revenue.

You must list your costs before assigning them to your activities/services.

 

Listing Direct Costs

List all the direct costs related to running your individual activities. These costs are incurred as a direct result of each activity (which should already exist in the Activities tab).

Via the Cost Recovery>Costs subtab:

  • Add new direct costs by completing the fields. Create as many as needed.
  • The Cost Attribution column allows you to specify how the cost is incurred. Click here to learn more about cost attribution types.
  • NOTE: The Flat Fee attribution means the cost is not dependent on the number of occurred hours or the number of participants.
  • Edit at any time by clicking within the desired field.
  • Delete a direct cost using the X icon. This removes it from activities it was assigned to.

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Listing Indirect Costs

List all the costs of running the organization that do not include activity/service or facility related expenses. Indirect costs are incurred regardless of an activity or facility.

Via the Cost Recovery>Costs subtab:

  • Add a new indirect cost by completing the fields.
  • Frequency: How often a cost is incurred. The frequency can vary by cost.
  • Date Range (optional): The period in which a cost is incurred. When specified, the indirect cost is applied to activities that occur within that range.
  • Delete an indirect cost using the X icon. It will no longer apply in the calculations.

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Listing Facility Indirect Costs

Include all the costs associated with running your facilities. Remember to create your facilities in the Resources tab and link them to your activities.

Via the Cost Recovery>Costs subtab:

  • Add a new facility indirect cost by completing the fields.
  • Location: Choose from your existing facilities.
  • NOTE: At this time, you can only choose from parent locations. If an activity is hosted in a child facility, select its parent facility instead.
  • Date Range (optional): The period in which the cost is incurred. When specified, the facility indirect cost is only applied to activities that occur within that range.
  • Delete an indirect facility cost using the X icon. It will no longer apply in the calculations.

FACILILITY_INDIRECT_COSTS.png

 

 

4. Assign Categories and Costs to Activities

Once your service categories and costs have been established, you must link them to your list of activities. Amilia pulls your roster from the Activities tab and lists them in Cost Recovery.

Assigning your categories and costs enables the tool to quantify the total percentage of cost recovery achieved in each service category.  To determine this, the cost recovery of each activity must first be calculated based on the number of activity hours that has occurred, the number of registrations and the activity's total costs vs total revenue.

 

Manually Assign your Service Categories and Direct Costs

Via the Cost Recovery subtab:

  • Scroll down to your list of services (e.g. activities).
  • Under the Service Category column, assign one category per activity. Activities require a service category in order for calculations to take place.
  • Under the Direct Cost column, assign as many costs as required for each activity. Click the X icon to remove a cost if required. Calculations will update accordingly.
  • Edit at any time by clicking in the fields. Calculations will update accordingly.

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Mass Assign your Direct Costs

The mass assign tool comes in handy when you have multiple activities that share the same direct costs. Apply or remove a direct cost to multiple activities simultaneously.

Via the Mass Assign subtab:

  • Use the Search field to select a cost. You can assign one cost at a time.
  • Use the Search activities field to pull up activities with the same keyword.
  • Check mark the activities to assign the cost. Click Apply.
  • Remove costs from activities by deselecting the check marks and clicking Apply.
  • Costs that are added or removed are automatically updated in the Cost Recovery subtab.

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How Indirect Costs are Assigned

Amilia automatically assigns a percentage of indirect costs across all applicable activities.

  • Indirect costs: A percentage of these costs are applied across all activities.
  • Facility indirect costs: A percentage of these costs are applied to activities that take place in the applicable facility.

Click here to learn more about how indirect cost percentages are calculated.

 

 

5. Manage your Cost Recovery Analysis

The Cost Recovery tool measures cost recovery progress as soon as participants register to your activities. Data populates automatically in the Cost Recovery table (and the Dashboard) in accordance with the service categories, costs and participant registrations attributed to each activity.

You can manage this information using the Cost Recovery table and its filters.

 

The Cost Recovery Table

The table provides a summation of the data used to calculate the total cost recovery for each activity. It automatically updates to reflect changes happening in Amilia, such as edits to your activities and the total number of participants registered to each. Calculations are also updated when modifications are made to service categories and costs.

  • By default, data for each activity counts from its start date up to the current day.
  • You can filter for specific activities as well as view data for a specified date range.
  • Apply changes to service categories and direct costs by clicking the fields.

8._Cost_Recovery_Table_EN.png

 

Filter and Export Data

Filters serve a dual purpose. They facilitate locating specific activities, but they can also capture cost recovery data for a specific date range.

  • Type a keyword in the Search field to filter for matching activities.
  • The Start/End Date field displays cost recovery data for the date range specified.
  • Choose which columns to display on the Cost Recovery table. Click Save to update.
  • Click Filters to display specific Seasons (programs), Sessions (categories), Service Types (subcategories) and/or Service Categories. Choose a Season to filter this way.
  • Click the 10._Export_icon_EN.png icon to the export the displayed Cost Recovery table to Excel.

9._Filters_EN.png

 

The Dashboard is another means of accessing and exporting data in the form of graphs and tables.

 

 

6. Visualize Statistics on the Dashboard

Data visualization is useful in conveying and interpreting information. The Dashboard converts cost recovery statistics into simple graphs and tables to illustrate the differences between service categories and the proportion of revenue each one represents.

The Cost Recovery Dashboard consists of:

  • Activities that require your attention: 15 of your lowest ranking activities in terms of reaching their cost recovery goal.
  • Bar Graphs: Illustrates where service categories are in relation to their cost recovery target %.
  • Pie Charts: Illustrates in proportions the percentage of revenue accrued in each service category, Season and Session.

 

Activities that Require your Attention

This notification table puts your lowest ranking activities in the forefront and offers a suggested price to charge participants upon registration so that you cover the costs of operating the activity/service.

12._Activities_that_require_attention_EN.png

 

The Bar Graph

The graph represents the actual vs the target cost recovery for each service category.

The horizontal axis shows the service categories.  The vertical axis can be read in two ways:

  • Actual_EN.png Actual: Represents the percentage of cost recovery achieved.
  • Target_EN.png Target: Represents the percentage of cost recovery to be met.

NEW_BAR_GRAPH_EN.png

 

Hovering over a bar shows you data pertaining to the service category:

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The Pie Charts

Amilia uses pie charts to display and compare revenue percentages for your service categories, Seasons and Sessions.

  • Select a service category on the bar graph for the pie chart to appear underneath.
  • Hover over a slice to show you its name, revenue, total cost and cost recovery %.
  • Information is also displayed on the table to the right of the chart.

PIE_CHARTS_EN.png

  • Clicking on a slice representing a Season will open another chart that breaks down each Session within the Season.

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  • Clicking on a slice representing a Session will open a final pie chart that breaks down each Service Type within the Session.

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7. How Cost Recovery is Calculated

The calculations involved in the cost recovery analysis are many. Thankfully, Amilia does the math for you.  The Service Categories table in the Cost Recovery subtab shows your organization the goals you've set and the total cost recovery achieved in a service category.

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We arrive at this final number by using the following calculation:

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  • Before using this equation, we must determine the total revenue and total costs for all activities. To do that, we must first find out the total revenue and total costs for each activity.

 

Net Revenue per Activity

Net Revenue is considered as being the remaining monies that go into an organization's pocket as revenue. If you use Amilia for online registration, we can find the net revenue for each activity by identifying appropriate invoices and then deducting promotions and cancellations.

Net_Revenue_Calculation_EN.png

NOTE: Organizations that are importing external data have their own way of calculating their net revenue, in which case the above formula does not apply.

 

Direct Costs per Activity

When calculating an activity's direct costs, we first look at how the cost is attributed.

  • Per activity hour:  The direct cost amount will be multiplied by the number of occurred hours.
    Ex: $20 per activity hour.
    If the activity is 10 hours: $20 X 10=$200 
  • Per participant: This direct cost will be multiplied by the number of participants in the activity.
    Ex: $10 per participant.
    If the activity has 5 participants: $10 X 5=$50 
  • Flat fee: The cost is a flat fee that will be added onto the total costs of the activity. They are not dependent on the number of occurred activity hours or the number of participants.
  • Distributed per Activity Hour: This cost type will group all of the activities with the cost. We find the total amount of hours occurred for these activities and distribute the direct cost amount across  the activities.
    Ex: $1000 distributed per activity hour.
    Activity 1 has 10 hours, Activity 2 has 40 hours and Activity 3 has 50 hours.
    Therefore: 10+40+50 = 100 total hours 
    Cost per Hour: 1000/100= $10/hour
  • Distributed per Participant: The direct cost will group all of the activities that share the cost. We find the total number of participants, and distribute the direct cost based on the number of participants for each activity.
    Ex: $1000 distributed per participant.
    Activity 1 has 30 participants and Activity 2 has 20 participants.
    Therefore: 30+20= 50 total participants
    Cost per participant = 1000 / 50= $20/per participant 
    Activity 1: 30 participants X $20/participant= $600
    Activity 2: 20 participants X $20/participant= $400
  • Per Occurrence: The direct cost will be distributed equally between all activities that share the same cost.
    Ex: $1000 per occurrence. There are 5 activities linked to the direct cost.
    Therefore: Cost per activity= 1000 / 5=$200
    Each activity will get $200 of costs added to its total.

 

These calculations are applied to all of the activity's direct costs. Summing them up yields the total direct costs for the activity.

 

Indirect Costs per Activity

This type of indirect cost is neither related to activities nor facilities (locations). In order to account for them within cost recovery, we use a Percentage of the Whole methodology.

Indirect_Cost_per_Activity_Calculation.png

  • We gather up all of the direct and facility indirect costs that the activity has incurred.
  • NOTE: If no facility is assigned to the activity, then the sum of that activity's facility indirect cost is 0.
  • The activity's direct and facility indirect costs are then divided by the sum of all the activities total direct costs and the total of all the facility indirect costs.
  • This yields a percentage which is then multiplied by the total indirect costs (excluding facility indirect costs) within the organization. This determines an activity's total indirect costs.

The sum of each activity's indirect costs is applied to the total costs of all activities.

 

Facility Indirect Costs per Activity

Facility indirect costs are applied across all activities that are linked to the facility.  If an activity is hosted at several facilities, then calculations are applied in accordance with the number of activity hours taking place at each applicable facility. Activities unrelated to a facility do not have facility indirect costs applied to them.

These formulas are used to determine the total facility indirect costs applied to an activity:

facility_cost_calculations_per_activity_EN.png

  • Once the total facility indirect costs for the activity has been determined, it is added to the sum of total direct costs and total indirect costs for the activity.  This results in the total costs for the activity.

 

If you have questions about your cost recovery analysis, let us know at support@amilia.com.

 

 

 

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