Why and When to use Business AreaCan any body tell me why we want to use business area and where it is going to be used, as I know it helps in consolidation and still more? CG.GopinathBusiness Areas in SAP are used to differentiate transactions originating from different points/lines/locations in business. Let me give some examples to elucidiate:- A company (say, ABC) is a huge company and has a variety of businesses under it. Let us say that it typically operates in 3 different domains like machinery manufacturing, trading and assembling of machine parts. There are 2 options here now - 1. Either create different company codes for the 3 business operations (which would be the easiest and require no creativity) or2.) Create each of these business lines into business areas (the better option). The advantages of using the second option is: 1. You can use these business areas if other company codes require the same areas 2. The configuration is simpler as in case of company code, you would require to go through the entire configuration of creating Chart of Accounts, Fiscal Year variants, posting periods variants and so on. In the business area option, you just need to attach it to the company code and the rest of the details in Business area is attached by default from the company code you are using it in. 3. Using the options in controlling (EC-PCA, Enterprise Controlling, Profit Centre Accounting), you can even draw up Balance Sheets and PL statements for your business areas and hence this is used for management accounting in some companies (like HP, Dell, etc) when it wants to k now the operating profits for different business areas/lines. The above was an example when the company wanted to separate entries according to the lines it operates in... the other case could be when it wants to find out profitability during its operations in cities and differentiates these cities into Business Areas... Business Areas are not much relevant in FI but are much more relevant in CO. Hope this clears. Jacob Joseph
