FI Configuration-01: Create Company Code

For all this time we have sold a collection of video trainings (SAP FICO minimal configuration for MM posting). May be some of you have purchased them from us for USD 55 price. We have gotten some positive testimonials from our customers. But, today, with the spirit of knowledge sharing (along with our SAP Forum launching) we announce that we will give them for free for everyone.

The video trainings are actually the video of computer-screen-capture of SAP FI minimal configuration process to allow MM posting. There are 22 video files of them. Each video contains SAP help screen for each step. But they don’t contain any other explanation. To help your SAP learning process, we will excel the video training with an easy-to-understand explanation about the relevant SAP concept (like other articles posted here). To do so, we will post it one by one (step-by-step) here, so it gives us time to write the good quality article. So stay visiting us and you can subscribe here to get the latest update of our website.

The first step of FI configuration is to Create Company Code.Company Code is a unique four alphanumeric characters that represents an independent and legal accounting entity. It’s the smallest and minimum necessary organizational structure in SAP that required by law to provide a set of financial reports (such as Balance Sheet and Profit/Loss Statements). In the real world, a company code can be a company of a corporate group. In an SAP client, there can be one or several company codes. The general ledger is kept at company code level. For consolidation process in SAP EC module, a company code must be assigned to a company. A company can comprise one or more company codes.

With SAP FI module, we can generate the financial reports of a company code. A company code’s financial reports are used for external purpose, such as for external auditors, shareholders/stock exchange commission, tax office, etc.

Company code is one of the two main organizational units of SAP FI module. The other one is Business Area. Business areas are used for internal purpose, such as for company’s management. Business areas represent separate areas of operation within one or some companies. With business areas, for example, SAP can generate financial reports of a specific regional area of a company. Let’s say Coca Cola company has one company code in USA (and several company codes in the whole world). With company code, SAP can only generate one set of financial reports for USA office. But, with business areas (depends on how it configured), SAP can generate sets of financial reports per state in the USA. By doing so, the management can analyze the performance of each branch in each state better. It gives more useful information that can be used in decision making process. The use of Business Areas is optional in SAP FI module.

All SAP transactions that have impact to the financial reports from all SAP modules (such as FI, MM, HR, etc) will generate accounting journals in company code’s general ledger. The transaction can determine the company code involved either from the user input for the company code (such as in FI module) or from other organizational unit that related to the company code (such as in MM module, company code can be determined from the plant that input by user).

In MM module (Logistics), each plant must be assigned to a company code (you can read our article to know how to assign plant to company code). A company code can have several plants.

A plant can also be assigned to a business area (you can read our article to know how to assign business area to plant). A business area can be assigned to several plants.

Material valuation can be set at company code level or plant level (you can read our article to know more about SAP material valuation).

We create company code from the following menu path of “SPRO” t-code: Enterprise Structure – Definition – Financial Accounting – Edit, Copy, Delete, Check Company Code.

There are two options to create company code:

  • Copy from other company code (or from SAP standard company code)
  • Create from the scratch
SAP recommends that we copy a company code from an existing company code. The advantage is SAP will also copy the existing company code-specific parameters. Then we can change certain data in the relevant application if necessary. This is much less time-consuming than creating a new company code.But in this example we will create company code from the scratch so we have to define other parameters need in other relevant configuration process manually. The step-by-step configuration process to create company code can be seen in our video training file that can be downloaded here. You have to register as our SAP forum member to download it.

In the next article we will explain about Chart of Accounts and how to create it. You could get the latest update of this blog by subscribing here.

SAP Study Materials Series e-Book
To get more details on SAP Enterprise Structure, you can buy my e-book (50 pages .pdf file) at SAP Study Materials Store.

The e-book explains in details about the SAP Enterprise Structure (MM and related modules such as FI, Logistics, and SD) Concept and Configuration Guide. Just like other articles on my SAP Study Materials blog, I wrote the e-book in a simple-to-understand way, so you can learn it easily. You don’t need to have extensive SAP knowledge and experience to be able to configure the SAP Enterprise Structure, as the e-book start explaining each step with the basic concept behind it. After understanding the concept, the e-book will show the step-by-step configuration with the screen shots.

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