dif b/w buniness area and prifit center

[Former Member]

hi experts,

Can anybody please tell me the difference b/w business area and profit center?

[Former Member]

Hi

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 have 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 helps.

Regards

Kavitha

[Former Member]

Hi, Lots of things were written on this enigma. You can look into this wonderful document in this link. Link: [http://sapdocs.info/2008/09/14/business-area-vs-profit-center-vs-profitability-segment/] If you still have any queries, pl revert. Trust this helps much! Cheers!

[Former Member]

Hello Ashok Singh & Subba Reddy

The (linked) document explained all other difference but forgot to mention the basic difference which is FI & CO. I mean Business Area belongs to FI where as Profit Centres are part of CO.

Another basic difference is profit centres can be cross company code but NOT business area.

Hope this amplifies the importance of business area, which is second most powerful organizational element in the SAP system.

Ambadas

[Former Member]

This message was moderated.

[former_member188826]

Both are organizational units within SAP. BA relate to a separate operational area in a company. Balance Sheet and P&L can be readily extracted for a business area.

However it is the profit centers that are being encouraged for future supports. Profit Centers are more management-oriented for the purpose of internal control. Under pre-ECC6 PCA would need certain programs to be run to extract balance sheet.