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IT Chargeback

Definition - What does IT Chargeback mean?

An IT chargeback is a process wherein departments associate costs with specific cost centers in order to more accurately track spending on IT. This is one of several options for accounting when it comes to determining what a company is spending money on.

Techopedia explains IT Chargeback

In an IT chargeback situation, instead of simply charging all IT costs to one central department, the company charges individual costs to the user groups or centers that most directly consume the goods or services that were purchased. This principle can make things clearer for administrators who have to manage costs and can also help to provide a clearer contrast for various options, such as outsourcing. With so many types of cloud and SaaS services proliferating across the business world, IT chargeback can be a useful way of ordering information and assessing value for cost.

IT chargeback is sometimes contrasted with other options for keeping track of costs, such as showback. In showback accounting, costs are presented in a decentralized way, without being actually cross-charged to the different accounts.

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