difference between company code & credit control Area

[Former Member]

HI,

WHAT IS THE DIFFERENCE BETWEEN COMPANY CODE & CREDIT CONTROL AREA.

[Former Member · Accepted solution]

Hi Shashikant,

A credit control area can include one or more company codes. It is not possible to assign a company code to more than one credit control areas.

[Former Member]

Dear SASHIKANT MAHUNTA,

Company code:

The smallest organizational unit of Financial Accounting for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.

This includes recording of all relevant transactions and generating all supporting documents required for financial statements.

Credit control area:

The credit control area is an organizational entity which grants and monitors a credit limit for customers. A credit control area can include one or more company codes.

You can also enter the credit control area separately for each posting, if this was marked in the appropriate company code.

When entering an order, the credit control area can also be determined from the business area and the sales area segment of the payer's master record or using a user exit.

Many company codes will be assigned to one credit control area, so that we can centralize the all company codes by monitoring one one credit control area.

So that a customer who buys the product from one company code the same customer can't purchase the product in another company code if credit limit is exceeded for that particular customer.

please revert if you have any further clarifications

Thanks&Regards

Raghu.k

I

[Former Member]

Dear Shashikanth,

To say simple difference between two are company code is legal entity which has to follow some some legal obligations to establish and business process and accounting related data,where credit control area is one of the organizational unit which controls the credit related activities for one or many company codes.

Regards

Ram

[Former Member]

Dear Shashikanth,

Company code :- The company code is the organizational unit that allows you to structure your enterprise from a financial accounting perspective.A company code should be depicted from a tax law, commercial or other financial accounting standpoint. It usually corresponds to a legally independent company.

A company code can also depict legally independent business premises located abroad if there are specific reporting requirements for these premises, like for example reports using the appropriate domestic currency.

credit control Area :-An organizational unit that represents the area where customer credit is awarded and monitored.

This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer.

Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between.

For example, if your credit management is centralized, you can define one credit control area for all of your company codes.

If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes.

Credit limits and credit exposure are managed at both credit control area and customer level.

Regards

Ram