Expense accounts a factory should keep apart

Which expense accounts a factory should separate so power, maintenance, consumables and freight stop hiding in one line, and how to budget and read them.

By Achekam · 11 October 2026 · 4 min read · For Manufacturing businesses in South Africa, Nigeria, Kenya

"General expenses" is where a factory's problems go to hide. The electricity bill for the presses sits next to office stationery. The emergency call-out for a broken conveyor sits next to the cost of painting the canteen. Diesel for the standby generator, freight on incoming steel and gloves for the packing line all land in the same few lines, and the owner reading the monthly figures sees costs rising without any idea which ones.

A chart of accounts that separates the factory's real cost drivers turns those monthly figures into something you can manage. This article sets out which expense accounts are worth keeping apart, how to add and tidy them in Achekam, and how to use budgets and month-on-month comparison to catch problems while they are still small.

Why one big expense line hides problems

A single line can only tell you that the total went up. It cannot tell you why. Consider a month where "factory overheads" rise sharply. The cause might be any of these:

• a tariff increase or a fault drawing extra power on one line;
• a machine breakdown and the call-outs that followed;
• a switch to a more expensive grade of cutting tool;
• extra standby-generator fuel during supply interruptions;
• inbound freight on an urgent raw-material order flown or rushed in.

Each has a different owner and a different fix. When they are lumped together, nobody owns the total, and the conversation ends at "costs are up".

Accounts worth keeping apart

The right list depends on your process, but most factories benefit from separating these:

Two splits matter more than they look. Freight inwards is really part of what your materials cost you, while freight outwards is a cost of selling; mixing them distorts both your product costs and your selling costs. And factory electricity should be apart from the office's, ideally by meter, because it is often one of your largest costs and the one most closely tied to output.

Adding and renaming accounts

In Achekam, each business has its own double-entry ledger with a standard chart of accounts created when the books first open. Accounts can be added, renamed or switched off, so you can shape the standard chart into a factory chart without starting again.

A few habits keep the chart useful:

• Name accounts for what they hold. "Plant repairs and maintenance" is clearer than "Sundry R&M".
• Group by number range. Keep related expense accounts next to each other so reports read in a sensible order.
• Agree the list with your accountant. They will know how the accounts map to the lines in your annual financial statements.
• Write a one-line rule for each. For example, "Production consumables: items used up on the line within a month; tools that last longer go to the asset register."

Switching off accounts you no longer use

As the chart grows, old accounts linger: a "Generator hire" account from a year you rented one, or a duplicate "Repairs" account someone created before the new structure. Switching an account off keeps its history in the books but stops new postings landing there by mistake.

Before switching one off, check it in the general ledger, which lists every posted line, and make sure its balance has been dealt with. The trial balance shows each account for all time, for a period or at a date, and tells you whether debits equal credits, which makes it the quickest place to see what each old account still holds.

Budgets per account

Once the costs are separated, budget them separately. Achekam lets a business set a budget per account and period and compare it with actual figures from its ledger.

Budget each account from its own driver rather than by adding a flat increase to last year's total. Electricity follows production hours and tariffs; consumables follow output; maintenance follows the age and condition of the plant. ACCA's introduction to budgeting, All about budgeting – part 1, explains flexible budgeting and how fixed and variable costs are budgeted across different levels of activity, which is how a factory's cost lines actually behave.

Reading the income statement month on month

Achekam's management accounts show an income statement for a chosen period beside the period before, and a balance sheet at period end, both added up from the business's own journals and exportable as PDF or CSV. The side-by-side view is what makes separate accounts pay off.

A monthly review routine:

1. Read each factory expense line against the previous month and against budget.
2. For any line that moved noticeably, ask the person who owns it why.
3. Compare energy and consumables with output for the month; a rise in cost with flat output deserves a closer look.
4. Note the explanation, so next month's review starts from what was learned.

The year-to-date preset starts on 1 January, not on your own year start, so if your financial year begins at another time, set the dates yourself when you look at the year so far. Labour is the other big factory cost, and labour cost by department shows how payroll reports break it down. For an example of building a budget account by account in a different industry, see an annual practice budget.

Where to begin

Print last year's general ledger for your largest expense accounts, sort the postings by what they really were, and draft the separate accounts from what you find. Add them, set a budget for each, and start the monthly review with the next month's figures.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.