Difference between Business place and Business Areas

Business Place vs Business Areas

What is the difference between business place and business areas?

Solution:

Business Place

The business place is typically an organizational unit based below the company code level. This is mainly utilized for reporting tax on sales and purchases. In few countries the tax on sales and purchases is levied locally, the user has is required to post-tax below the company code level for generating the tax returns locally. For doing this, user must assign their invoices to a business place.

In the Contract Accounts Receivable and Payable (FI-CA), the business place is generally utilized for countries like India, Brazil, Thailand, and South Korea. In case required user can activate the use of the business place for other countries, for instance, Spain. 

For official document numbering in FI-CA, the business place is accessible only to the countries such as Greece, Brazil, Ukraine, Spain, Thailand and Philippines. User is required to enter the business place for these countries when he assigns the number ranges to company codes and document classes in Customizing for the purpose of official document numbering.

Business Areas

In SAP, the Business area is defined as an organizational area based within the financial accounting module. Business areas are mainly utilized for facilitating the external segment reporting across various company codes, which provides coverage across the main areas of the company’s operation (product lines, branches). 

For creating the financial statements, the data should be updated in the general ledger transaction figures for each specific business area. Listed below are the two separate procedures for doing this:

• The system supplies the business area with the correct information while posting the original document.
• The business area utilized in the original posting (mainly when the initial value has not been entered) is altered to the correct value in a second step, by utilizing an adjustment posting in the general ledger. This can at times distribute the posting to various areas of business.