Business aera& profit centers

hi experts ,
what is main difference between the business area & profit center ?
because my client using both for reporting ?
thanks in advance ?

Hi,
A profit center is a management‑oriented organizational unit used for internal controlling purposes. Dividing your company up into profit centers allows you to analyze areas of responsibility and to delegate responsibility to decentralized units, thus treating them as u201Ccompanies within the companyu201D.
The essential difference between a profit center and a business area is that profit centers are used for internal control, while business areas are more geared toward an external viewpoint.
Hope this helps you.
Rgds
Manish

Similar Messages

Intercompany Billing for multiple Profit centers

Dear All,
We have a situation to do intercompany (company a to company b) billing without extending material. Also, maintain one plant to maintain stocks that is in company a. Customer place the order in company b system will do billing without maintaining any stocks in company b so our requirement is to generate profit centre wise P/Ll for company a & company b.
Any suggestion to overcome this scenario ?
Regards,
Madhawa

Thanks for your interest.
The requirement is based on the following objectives:
1) Reductiion in the number of plants
2) This is required coz a stock may be lying at a particular location (plant) which can serve as a common stock for all Business units (Profit Centers). Since it is in the same plant, there will be no requirement for stock trf. (goods issue & goods receipt) But then it should facilitate assignment of the profit centers. I strongly believe that could be easily dealt with sales order related production (MTO) through substitution rules but I have doubts about MTS coz i cant find any substitution rules configs.
I hope it clarifies the requirement

Profit centers with COPA

Hi,
I have a few doubts about the need of EC-PCA in a project where COPA is being implemented.
The client would like to get info about the profitabilyty of organisation units as well as products, groups of products, clients and so on.
However he is unable to assign materials to only one profit center (which would be production departaments in this case). Different Finished goods, semi finished goods, wares and services can be assigned to more than one production departament. (a material index cannot be assigned to only one PC in this case).
What would u advise me? Should I use EC-PCA but change the PC hierarchy or COPA is enough for these purposes?
Best wishes,
Karol
Message was edited by:
Karol W

Dear Karol,
Here the some infirmation is about Profit center related and cost center.hope this infirmation will helps you
You would need check the design of PCA and what the business wants to use PCA for. For example do you want to produce P&L Statements and or Balance Sheets by Profit centers etc.
In terms of the cost center assignment to profit centers, the main use of this is to ensure that all costs posted to a cost center will be simultaneously posted to the assigned Profit center. Now in PCA configuration you have to create a "Dummy Profit Center", the consequence of this is that if a profit center cannot be derived (for example if you do not maintain a profit center in the material master) or from the cost center or a profit center is not entered in a posting, the entry will be automatically posted to the "Dummy" profit center.
In terms of design, we are faced, in certain circumstances when we design PCA along the product lines for example, what to do with certain postings such as bank charges or admin costs, which are not directly attributable to the product line.
One way to treat these, is to Create a "Corporate" or "ADMIN" Profit center and assign all the service cost centers to this Profit center and at month end re-allocate to the Product Line Profit center via Distribution or Assessment for example based on sales volume or fixed amounts or percetntages or SKF's to make the reporting more meaningful
create additional profit centers and assign all admn, IT other than production cost centers to either Common, Admin or Corporate profit centers. Suggest you create following non product cost centers
1) Corporate
2) Admin
3) Product Common
Assign profit centers to cost centers logically
In MM master records assign product related profit centers to RM and FG / SFG material types. This takes care from material accounting point of view in PCA
For transfer of costs collected in Non Product related profit centers proceed as follows
1) Create PCA assessment Cycles
2) At month end allocate these expenses and check cost in non product profit centers is zero.
3) Decide on the allocation basis
4) This ensures that you have PCA wise all P&L items accounted.
5) You can then design PCA wise report painter reports for PCA wise P&L
Hope the above will help you
Prem.

Foreign currency revaluation and Profit Centers

Hi all,
We want to use F.05 to post exchange rate differences but are working with a system that uses also Business areas and a multitude of Profit Centres (in one company code).
We have One company code
> n business area for this one company code, and
> n profit centre per business area
SAPs standard solution for this issue is use transaction 3keh/ 3kei and send it to a specific profit centre (one per company code).
This does not help us. We would need to have the differences to be distributed at least on Business area level or at least on profit centre level.
Who can help? Any suggestion mostly welcomed! What would need to do to achieve this?
Thanks!
Hein

Hi
If you want to assign the differences to Business areas also other than profit centers.
You can force the assignment of the GL account to Business area, profit center, cost center with transaction OKB9. Or try out validations and substitutions.
Try it out it might be helpful.
Regards,
Suraj

Profit centers and cost centers - language maintenance

Hi!
We have an SAP environment running where three countries use local languages and the fourth one uses English, also most people working centrally with the system uses English. Also the hierarchies are exported to BI from the English language version of the system. Thus we have a need to maintain names of hieararchy nodes and profit centers/cost centers in several languages.
Is there any easier way to do this than logging in to all relevant language versions (usually one local and English) to maintain these? Is there some setting that makes it enough to maintain in for instance the English version and it updates all the other languages?
Best regards,
Jan Pettersson

Not really the answer I was hoping for
it's business side users in each country maintianing the hieararchies and PC/CC... so LSMWs and imports and exports is unfortuntantely not the best of options.
Hoping for someone else with a similar situation with additonal ideas.

Profit Centers Query

Hi,
Can anyone tell me how do we assign profit centers and at what levels and where?
Please let me know about the same.
Thanks and Regards,
Kanthi.

Hello Kreddy,
The 1st step is to define it in the cost accounting form --> profit center in the financial module.
It is assigned in the marketing document --> row level, inventory transaction --> row level and UDF (using FMS).
It is clear that the use of profit center (based on F1 help file):
When you create a marketing document that involves revenue and cost of goods sold accounts (such as a delivery, A/R invoice, return, A/R invoice + payment, and A/R credit memo), the transactions are posted to the defaulted revenue and cost of good sold accounts and allocated to the profit centers that were linked to these accounts via the Chart of Accounts.
The following procedure explains how to link different profit centers to the revenue and cost of goods sold accounts in the document and/or row level.
The summary of the above definition is profit center can make your company more selective in the revenue, COGS and budget setup in the business operations.
Rgds,

Profit centers inventory groups

If Profit centers are created, can they be assigned to inventory groups?

Hi,
Please check Note No. 909342.
Kind regards,
Jitin
SAP Business One Forum Team

Preparing Balance sheet by using profit centers only for BS Items

Dear Experts,
could you please help me out regarding the following issue.
business area wise we can get the balance sheet but i want to know is there any possibility to get the BS by using profit centers only for BS Items or can we assign biasness area as well as profit center in a single screen.

Hi!
You can use following report :
S_ALR_87013336 (Report for Balance sheet at Profit Center and Group Level).
Hope this will help.
Thanks & Regards,
Taral Patel

Internal Profit (Between two/more Profit Centers)

Dear friends,
My client has nearly 30 profit Centers (Each product/line) and final product of one profit center sya X is an in put of production process of another profit center say Y.
Here problem is that Profit Center X wanted to claim some internal profit margine on Profit Center Y because it supplying materials and Profit Center X want to treat Y as an External customer.
Friends, this profit is shown in internal reports only (Profit center wise P & L Account) and it cannot appeared in Financial Statement. How this can be configured in the system? Please help me
Thank you

Hello Dasu,
This situation is not unique to your client, but universal to enterprise operating with two or more company codes / business lines / products.
Recording inter-profit centre transactions at sales price is not that easy; however with the standard functionalities this can be achieved. SAP system has provided various functionalities with the combination of currency and valuation which is more commonly known as u201CTransfer Pricing or Multiple Valuation Approachesu201D.
You define your currency and valuation profiles in Customizing under Controlling  Controlling General  Multiple Valuation Methods/Transfer Prices  Basic Settings  Maintain currency and valuation profile.
You assign the currency and valuation profile in Customizing under Controlling  Controlling General  Multiple Valuation Methods/Transfer Prices  Basic Settings  Assign profile to controlling area.
You activate the profile under Controlling  Controlling General  Multiple Valuation Methods/Transfer Prices  Activation  Activate multiple valuation approaches
For more information, you may refer to
http://help.sap.com/saphelp_erp60_sp/helpdata/en/eb/13811243c411d1896f0000e8322d00/frameset.htm
This functionality is very powerful and interesting.
I hope you can enjoy with this.
Enjoy SAP!
Ambadas

Internal Profit (Between Two Profit Centers)

Dear friends,
My client has nearly 30 profit Centers (Each product/line) and final product of one profit center sya X is an in put of production process of another profit center say Y.
Here problem is that Profit Center X wanted to claim some internal profit margine on Profit Center Y because it supplying materials and Profit Center X want to treat Y as an External customer.
Friends, this profit is only shown in internal reports only (Profit center wise P & L Account) and it cannot appeared in Financial Statement. How this can be configured in the system? Please help me
Thank you

Hello Dasu,
This situation is not unique to your client, but universal to enterprise operating with two or more company codes / business lines / products.
Recording inter-profit centre transactions at sales price is not that easy; however with the standard functionalities this can be achieved. SAP system has provided various functionalities with the combination of currency and valuation which is more commonly known as u201CTransfer Pricing or Multiple Valuation Approachesu201D.
You define your currency and valuation profiles in Customizing under Controlling  Controlling General  Multiple Valuation Methods/Transfer Prices  Basic Settings  Maintain currency and valuation profile.
You assign the currency and valuation profile in Customizing under Controlling  Controlling General  Multiple Valuation Methods/Transfer Prices  Basic Settings  Assign profile to controlling area.
You activate the profile under Controlling  Controlling General  Multiple Valuation Methods/Transfer Prices  Activation  Activate multiple valuation approaches
For more information, you may refer to
http://help.sap.com/saphelp_erp60_sp/helpdata/en/eb/13811243c411d1896f0000e8322d00/frameset.htm
This functionality is very powerful and interesting.
I hope you can enjoy with this.
Enjoy SAP!
Ambadas

Profit Centers & Distribution Rules

hi experts,
I have created a distribution rule which consists of 5 profit centers as following:
Sales1 20%
Sales2 20%
Sales3 20%
Sales4 20%
Sales5 20%
I posted a JE with amount of 2000 to one of my expense accounts with distribution rule tagged in row level.
Run:
P&L statement with profit center Sales1 is selected (expected result: expense account 400)
Result:
Empty~NOTHING. (I believe 400 should be showing in my P&L right?)
Please advice me on above statement.

Hi Lim,
you need to define the distribution rule (remember if it is direct charge or indirect charge), than You can post a document or a JE with a G/L account of expenses or profit and you need to specify the Dsitribution Rule code into the JE row with the G/L Account.
When you run the Profit Center Report and you can see the amount's distributed by Profit Center based on the rule you have defined.
With the Profit & Loss Statement, you can't run it with the Profit Center into Expanded Selection Criteria but you can run only with the Distribution Rule (in fact into the JE you have inserted the rule non the profit center !! ).
This is a limitation and a system definiton of Cost Accounting into Business One.
Regards,
Massimo Sala - Italy LPE

Logic for configuration of profit centers

Hi,
I'm through with configuration of cost centers in our company, now I'm due to configure the profit centers. One point is, in our sister concern, they have copied all the cost centers and configured the profit centers on the same logic.
could anyone suggest me on how to do this, if there is any copy procedure and what would be the effects of copying the cost centers and configuring profit centers with the same number.
say if a cost center exists like: 402010 which is mumbai manufacturing, can I have the profit center with the same number 402010 for mumbai manufacturing, and what would be the effect of doing so.
And can I copy the variances cost centers as well to make variances profit centers
Plz suggest
Regards
Soujanya.

Hello
Please go through the IMG settings, after you get an idea from the below info
The master data includes the master records for the individual profit centers, as well as the corresponding standard hierarchy and alternative profit center groups.
Your companys standard profit center hierarchy may somewhat resemble the cost center hierarchy. Consequently, Profit Center Accounting provides a function which lets you copy the entire cost center hierarchy to the profit center hierarchy (see Customizing). You can then change the profit center hierarchy with the normal maintenance transactions to meet your requirements in Profit Center Accounting.
It is also possible to create account groups that are valid only for Profit Center Accounting. These account groups help you structure your information system to better meet your requirements.
It is possible to copy the cost and revenue element groups used in Cost Center Accounting (CO‑CCA) or the balance sheet account groups used in Financial Accounting (FI) to Profit Center Accounting, and then change them in EC-PCA to meet your requirements.
You can also maintain FI accounts and CO cost/revenue elements from the Profit Center Accounting application menu. However, these are not originally master data for Profit Center Accounting. On the contrary, the integration of the SAP system makes it possible for you to access the FI and CO master data directly.
The assignments of all profit‑relevant objects to profit centers play an important role. These determine how your business is divided up into areas of responsibility. You make these assignments in the master data of the original objects (materials, cost centers, orders, projects, sales orders, assets, cost objects, profitability segments).
Reg
assign points if useful

Level of profit centers

Hi All
Could you please tell at what level ( level 5 or level 9 ) are the profit centers
maintained in SAP. For example how to find the level of FRBs in the table
BSIS.
Also if anybody can explain me the concept of cost centers, profit centers
and cost center groups.
Regards
Ankit

Hi Ankit,
i am giving the defination of cost centre, profit centre
Cost centres are divisions that add to the cost of the organisation, but only indirectly add to the profit of the company. Examples include Research and Development, Marketing and Customer service. A cost centre is often identified with a speed type number.
Because the cost centre has a negative impact on profit (at least on the surface) it is a likely target for rollbacks and layoffs when budgets are cut. Operational decisions in a contact centre, for example, are typically driven by cost considerations. Financial investments in new equipment, technology and staff are often difficult to justify to management because indirect profitability is hard to translate to bottom-line figures.
Business metrics are sometimes employed to quantify the benefits of a cost centre and relate costs and benefits to those of the organisation as a whole. In a contact centre, for example, metrics such as average handle time, service level and cost per call are used in conjunction with other calculations to justify current or improved funding.
Profit Center Accounting provides visibility of an organizations profit and losses by profit center. The methods which can be utilized for EC-PCA (Profit Center Accounting) are period accounting or by the cost-of-sales approach. Profit Centers can be set-up to identify product lines, divisions, geographical regions, offices, production sites or by functions. Profit Centers are used for Internal Control purposes enabling management the ability to review areas of responsibility within their organization. The difference between a Cost Center and a Profit Center is that the Cost Center represents individual costs incurred during a given period and Profit Centers contain the balances of costs and revenues.
nagesh

Cost centers and profit centers mapping

Hi Friends,
I'm through with defining cost and profit centers. How do I map the cost centers and profit centers. I've gone ahead and assigned the cost elements to cost centers in OKB9, giving 2-Business area mandatory.
I'm just done with defining the profit centers, but i dont have an idea how do I map the profit centers.
pls suggest.
regards
Pallavi

found it

Business Area & Profit Centre

< MODERATOR: Message locked. Please post this message in the [Controlling forum|SAP ERP Financials - Controlling;. >
Hi,
What is the difference between Business Area & Profit Centre.
how alternative profit centre is from business are.
any documentation available.
Regards,
Shekar.

Business area:An organizational unit in external accounting, which corresponds to a separate operational or responsibility area in the organization, and value flows recorded in Financial Accounting can be assigned to it.
The business area should be treated as a separate economic unit, for which you can create an internal balance sheet and a profit and loss statement. The business area is, however, only an internal organizational unit and does not have any external impact.
You define business areas if you wish to create a balance sheet and a profit and loss statement for internal areas, in addition to company codes.
Profit Center:
A profit center is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of internal control.
you can use your profit centers as investment centers.
Profit center Accounting at the profit center level is based on costs and revenues. These are assigned statistically by multiple parallel updating to all logistical activities and other allocations of relevance for a profit center.

Business aera& profit centers

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