How to create hierarchy purchasing category for services, not for item.

We want to promote in our company the purchase requisition based on the category for services.

The required category should be Hierarched. For Example:

Expenses > Business Insurance > Insurance > Property insurance/ Sea Insurance.

1. Where should I define it and how to link the hierarchy so when I search for a category in PR, an haierarchy list would open for the user.
2. In addition, for each hierarchy combination, we are going to add a specific budget account.

FYI - we are using the Redwood SSP.

Thanks,

Nitzan