Business Areas are used to differentiate transactions that come from different lines of business in a company.
There is a big company XYZ which runs multiple businesses. Let us assume it has three different domains like manufacturing, marketing, and sales.
Now you have two options −
- First is to create different company codes.
- And the other better option is to create each of these business lines into the business areas.
The benefits of using Business Areas in this case are as follows −
- You can use these business areas if other company codes require the same areas.
- It is easy to configure if you use a Business Area, as you just need to attach to the company code and the other details in that business area will get attached automatically.
- By using Business Areas in controlling, you can create Profit and Loss statement, Balance Sheet, etc. for business areas. Hence it is used for management accounting in a few companies.
Note − Business areas are used more in Controlling as compared to Finance Accounting.
How to create a new Business Area in SAP FI?
Expand Enterprise Structure as mentioned in the previous topic → Definition → Financial Accounting → Define Business Area → Execute → Go to New Entries.
Enter the 4 digit Business Area code and save the configuration.