Business area and profit centre

Friends,
Please tell me difference between profit center and business areas. If reporting can be done using both of them in similar fashion, why can't only one of them be used, instead of using both of them?
There should be a logical distinction between them, please explain that.
Thanks,
A

Hi,
1. Main distinguishing factor is that Distribution or assessment within profit center can be done for allocation of overheads.
No such allocation functionality is possible within Business area.
2. Hierarchical structure for profit center can be created.
Hierarchical structure for business area is not possible.
3. Business area does not need to be attached to any organization structure.
But profit centers can be created under the controlling area.
4. PCA helps to arrive at profitability of business unit
Business area is used to segregate FI transactions pertaining to various
5. Profit Center Accounting as the Product manufactured.
Business area would have been useful only when the Areas of Business are Different.
6. Business area concept is used for making strategic decisions by the management whereas the primary purpose of profit center is accounting.
7. PCA would be much more suitable. You may need some derivation rules for Populating Profit centers, but it would be much more easier than using Business area and reconciling FI-CO on monthly basis.
8. The main difference between profit centers and business areas is that profit centers are used for internal management whereas business areas are geared more towards external purposes.
9. Business area satisfies accounting purpose while Profit Center satisfies CO purpose.
10. Business area was used as function oriented (e.g. SALES, ACCOUNTING etc)
as per old school where we used to separate B/S as per functionality. But Profit Center is more related with group of products or COS (COGS) view.
SKS

Similar Messages

Business area and profit centre field to make mandatory in all transactions

Dear Team,
My client wants to make the above mentioned fields mandatory while entering any business transactions. viz. MM,FI / SD transactions. He wants to capture the details Business area wise as well as Profit Centre wise.
Please let me know whether
1. I need to make "Business Area" as well as "Profit Center" field mandatory in "ALL THE FIELD STATUS GROUPS"of particular field status varient. If not which particular field dtatus groups to use. &
2.Whether "Profit Center" or "Cost Center" to make mandatory and to which GL.
Please help.
Waiting for your reply.
Thanks and Regards
Sagar

Hi
A good way to make this Check compulsory in case Document Splitting is active in your system.
Follow the path
IMG>Financial Accounting (New)>General Ledger Accounting (New)>Business Transactions>Document Splitting>Define Document Splitting Chracteristics for General Ledger Accounting.
Here you can make splitting active for Both business Area and profit center.
If any where in the posting system does not find either of Business Area or Profit Center, it would give an error
Thanks & regards
Sanil K Bhandari

Business areawise and profit centre wise debtors balances

Hi All,
I want to know the standard T code to see the debtors/Creditors balance report based on business area and profit centre wise (not debtors aging report).
Thanx.
SP Shukla.

Hi,
Use t.code: SARP, then select report tree as FIAR then click on display icon, here you will get no of reports for customers.
all the best
Prasad

Business area Vs profit centre

hi,
can any one tell me what are the main differences between business area and profit centre.

Hi Shanker
Business areas are used in external segment reporting (over and above company codes) based on the significant areas of operation (for example, a particular region, a branch, product lines) of a business enterprise. Financial statements from business-area wise cannot be drawn up for commercial and tax law. Business area reports (e.g balance sheets and income statements for specific area) are used only for internal reporting purposes.
Profit Centres on the other hand are internal areas of a company that the responsibility for achieving target profits or productivity goals.
The objective of BA is more for reporting purpose whereas PC allows to analyse areas of reponsibility & to delegate reponsibility to decentralised units.
Thus PC are basically treated as companies within a company & ensures effective control.
I hope this helpls.
Regards
Kavitha
Edited by: Kavitha Emani on Aug 6, 2008 5:20 PM

Difference between Business area and profit center accounting

Hi Frnds,
Can any body explain about difference between business area and profit center accounting .

Hi
Business area will have many profit centers. For example Vehicle is a business area in a company. Vehicle can be cars and Bikes etc. Here Vehicle is business area and Cars and Bike are profit centers. In broad Vehicle is a profit center. But as it has sub areas those are profit centers. So profit centers cannot be replaced with business area and vice versa. We can replace business area by Profit centre, only condition is that it should be in same controlling area. The business area is more like a business unit of a company. You can have multiple profit centers within a business area.
Main distinguish factor is that distribution and assessment in possible in profit center but not in business area.
One more distinction is that Business area need not be attached to any organisation structure. But profit centres can be created only under the controlling area. Business area can be across controlling area.
Business area concept is used for making stragic decisions by the management whereas the primary purpose of profit centre accounting is responsibility accounting.
http://help.sap.com/saphelp_erp2005/helpdata/en/ff/277203deea11d3b5b4006094b9b0a5/frameset.htm

Vendor Ageing Report Business Area and Profit Center wise

Dear Experts,
I have a requirement where user wants a Report for Vendor Ageing Business Area and Profit Center wise.I checked Standard T Codes but the same were Business Area wise but i could'nt find Profit Center wise Report.If their is any standard functionality then please advice.
We are using SAP ECC 6.0 Classic GL with Spl Purpose Ledger active.Can someone please advice can i derive such a report through Report Painter.If possible please advice in details.
Your Valuable inputs shall be appreciated....
Regards
Rahul

Hi Durga,
Can you please elaborate further on the same how you are determining the Report in FBL1N.What are the prerequisited to be taken care of and some further details on the same.
My Bus Area is not as same as Profit Center eg
BA          PC
FXRT     RT0001 / 2 / 3
TMMG   TM0001/ 2 / 3
LTOB     LO0001/ 2 / 3
I checked in my system but we do not have the Program for the following T Codes
S_PCO_36000218 - Segment Receivables
S_PCO_36000219 - Segment Payables
S_AC0_52000887 - Profit Center Receivables
S_AC0_52000888 - Profit Center Payables
Regards
Rahul

WBS, Business Area and Profit Center not flowing in GR/IR Account

Hello Experts,
I have come across a very strange situation. I have two MIGO documents which are showing different posting characteristics:
1) FI Document 5000000553
In this document, the Business area and profit center is flowing in GR/IR Clearing Account (15660000) but WBS element is not flowing to this line item.
Screen shot is as follows:-
As you can see from the above screen shot that, for GR/IR Account 15660000. Only Business Area and Profit Center are flowing and WBS Element is not coming.
2. FI Document 5000015602
In this document, the WBS element is going in GR/IR Clearing Account (15660000) but Business area and profit center is not flowing to this line item
Screen Shot is as follows:-
From the above screen shot, Business Area and Profit Center are not flowing but WBS Element is coming.
Could you please let me know what could be the possible reason for this behavior of both the documents.?
Regards,
Amit

Hi Saurabh,
Its great to see your reply. Yes, I know that currencies and posting dates are different. But that's the way it is. One document is for fiscal year 2014 and other is for 2013. There is nothing related to currency and posting date which was causing the strange behavior of the system.
However, our team analyzed the issue and found that only for service material having a special valuation type related to services is causing the problem and still we are diagnosing the other possible root cause as well.
Thanks for your co-operation and suggestion.
Regards,
Amit

Business Area and Profit Center In Document Splitting

Hi,
We are using Business area and Profit Center characteristics for document splitting.
In one transaction, the Business area and profit centers are defaulted through the cost center.
The document is successfully split in respect of the business area, but the profit center is not filled, thereby giving error while posting.
Please suggest.

Hi,
Actually, we have all three scenarios, profit center, segment and business area..
As suggested, we have checked all field status relevant.. profit center is optional in all cases..
Now, Pls consider the scenario without business area in document splitting characteristics..
If I post an expense, profit center is picked thru cost center and segment thru profit ctr. The vendor or bank line item inherits the characteristic values from the previous line item.
Now, in addition we have business areas in doc splitting characteristics.
Business area, again is populated thru cost centers, along with profit ctr and segment.
The business area gets correctly populated in the vendor line item.. but the profit center doesnt.
Please let us know the reason..
Edited by: Swapvik on Mar 23, 2009 4:07 PM

Table name having relationship between Business area and Profit Center

Hi guys,
Can you tell me the table name showing the relationship between Business area and Profit Center in fb60 transaction.
thnx
hema

HI.
BSEE u2013GSBER Business area.
BSID-PRCTR Profit center
Regards.
jay

Error with Business area and profit center

Hello Guru's,
I have an issue when posting the stock through t-code MB1C and 521 movement type. We have assigned business area and profit centers for plants as below:
For Plant 1000,
Business Area:       1100
Profit center:           1100
And For Plant 2000,
Business Area:        1200
Profit center:             1200
But when I am assigning plant 2000, and assigning business area and profit center as 1200 respectively. System by default is picking as 1100 with a warning message.
Please help this resolving this issue, I want the system to take the correct assigned BA and Profit center.
Regards,
Varun Siddharth

Hi Varun,
One of the possible ways is, to assign a business area to the cobination of Plant and Division in OMJ7 (Assignment is possible for other combinations as well). Later you can define a substitution rule so that, a profit center is substituted to the combination of Plant and Business Area.
Hope it helps you.
Regards,
Ravi Kumar

Using Business Area and Profit Center Accounting with New GL functionality

Hello,
We are Public Sector and using ECC 6.0, we have been using Business Area with Fund Management. We also use Special Purpose Ledger with Document splitting. Before migrating to New GL functionality, we want to understand
-     The possibility of using both Business Area and Profit Center Accounting, and the impact on the system
-     If we activate Profit Center Accounting before migration, how will it work with the splitting process?
-     If we migrate without Profit Center Accounting, will this cause the activation of Profit center accounting later to be more complicated, even if we migrate again?
Thanking you

Hi Sachin,
Thank you for the reply, we want to know that
-     The possibility of using both Business Area and Profit Center Accounting, and the impact on the system
If we decide using Profit Center Accounting with Business Area with New GL functionality how we should do it
-     should we activate classical Profit Center Accounting before migrating to New GL functionality, if we do this how will it work with the splitting process?
-     If we migrate to New GL functionality without Profit Center Accounting, will this cause the activation of Profit center accounting later to be more complicated, even if we migrate again?
Thanking you
Tipu Khan

Business area and profit center

plz can anyone explain me what is the diffrence between business area and profit center.

Business Area is a type of organizational unit structure, primarily used to facilitate external segment reporting across company codes, covering the company's main areas of operation. Business Areas run across company codes. The relationship is n:n. Business Area is part of FI.
Profit Center is also a type of organization unit structure, used for management/ internal controlling purposes. Dividing the company up into profit centers allows one to analyze areas of responsibility and to delegate responsibility to decentralized units, thus treating them as companies within the company. The profit centers also run across company codes. The relationship is n:n. Profit Center Accounting is part of Enterprise Controlling.
While it may look apprantly that both Business Area and Profit Center do the same kind of analysis and reporting, with in SAP internal architecture they are kept in different modules and different tables.
SAP Note 321190 provides the difference betwen Business Area and Profit Center, which you can get from SAP Service Market place.
SAP has maintained Business Area from 4.6B onwards, while there are enhancements happening in Profit Center side.

Difference between business area and profit center

hi all
could you please tell me about difference between business area and
profitcenter.
thanks,
regards,
chennuri.

HI
Read below
Profit Center - The profit center view shows the various
internal areas of responsibilities. Objects such as cost
centers, materials, etc can be used for profit center
analysis. Profit center can be used to determine the
revenues, costs, and profitability for specfic areas of
responsibility.
Business Area - Business area forms an important part of
external reporting. Analysis of various segments, product
divisions, regions etc is possible using business areas.
Business Area: This is optional
This can be used cross compane codes
This is for Internal Purpose
It is not Legal Entity like Co Code
The transation entered in Business are, Debit total will
not tally with credit total
Since it is used for segment wise or area wise or line wise
this is used for internal report purpose only .
Balance Shhet and P & L stataments can be drawn on segment
wise
Profit Centre: Generally in terms of SAP or Finance the
meaning of Profit centre is to know the profitabilty.
In same manner , The managers wants to know the ROI from
their investments, obviously we nned to use the tool.
This ROI may be geographically or area wise or division
wise. P.C provided us profitablity of the particular area
for internal purpose ( Only for Internal )
Business Area is an optional entry.Whenever company wants
financial statements businessarea wise we can maintain
BAs.And also we can maintain BA as Segment Wise,Product
Wise,Geographical Location wise.
Profit center is used to know the profits of companies.PC
is also used for to know the profits as aProduct
wise,Segment wise,geographical location wise.If anything
wrong inthis answer plz correct me..
Hope this helps
Good Luck
Hari

FI org i.e. business area and profit center

I have one company code with 2 business lines (Product A and Product B)
There are 3 location in India. So which one is better?
Products as business area and location as a profit center
or
Location as a business area or product as profit center.
Please let me know the reason.

Hi,
Please refer to the OSS note 321190:-
https://websmp130.sap-ag.de/sap(bD1lbiZjPTAwMQ==)/bc/bsp/spn/sapnotes/index2.htm?numm=321190
The decision was made to pursue the PCA approach as per SAP Note 321190, which was released in 2002, to do no further development for business areas, and to focus future development on profit centers, although FI-BA would continue to be supported. The rationale behind this suggestion was that EC-PCA had significantly better functionality than FI-BA. For example, EC-PCA has its own allocations, separate ledger, hierarchical reporting, transfer pricing, profit center substitution rules, and integration with planning and SAP Strategic Enterprise Management (SEM).
I hope now it is clear to you.
Regards,
Gaurav

IU Elimination Difference Subassignments (Business Area and Profit Center)

Hi experts, it's my second tread in the forum and is in one day, I'm expired.
 
 
Let's clarify the situation.
 
 
At the past I'm using the parameters settings of IU Eliminination Difference Subassigments with fixed values, now, with our necessity, we question SAP how to do a interunit elimination receiving the business area and Cons. Profit. Center from the trigger at the differences, and it apparently was simple solve, we just need to mark the "default value" flag and voila, system will do what we need, but is not so simple how we think.
 
 
In productive environment, we have data since June/2009, and we want to change this from Jan/2010, but elimination is cumulated, and I suspect SEM-BCS is trying to correct the past.
 
 
Does anybody pass this situation ?
 
 
What we need is on every elimination on selection items and the difference items receive the business area and cons. profit center from the trigger (this have to remain with the origins), and the total value of elimination on period don't have to change, do you understand ?
 
 
When change the configuration of the task and execute that, the eliminaton value change too ? We suspect it is
because we have data before this period.
 
 
If you need more explanation, please advice me, I will give more details.
 
 
Here we are in SEM-BCS 600 EHP 2
 
 
Best Regards
 
Alexandre Mendoza Collepicolo

The breakdown category and the corresponding data is the same in the source system. I think I did`t express very well.
I will put my understand about the default flag of the difference screen: This is used to try to get the subassignments from the items which we select on the preview screen not the fixed parameters. i.e.: Business Area.
On January, we decided to get the subassignments on difference from the items on selection screen, for this we flag the default value, and re-execute the elimination on the monitor, but, when we execute this, the value is entirely wrong/different from the other, we suppose when we flag that and re-execute the elimination we get more line of elimination on total records with the business area, but that's not what happened, we have strange value with a total of elimination very different.
Is it clear the operation ?
I contact SAP and they are analyzing the case, but if anyone had a similar problem please advice me.
Best Regards
Alexandre Mendoza Collepicolo

Business area and profit centre

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