Business area

Profit Center

Transfer prices

You cannot work with transfer prices at business area level. It is not planned to include these functions in the future.

You can work with transfer prices between profit centers.

Profit center accounting / consolidation

You can use business areas across several controlling areas. At this level, you can also consolidate across several controlling areas.

Profit center accounting occurs within one controlling area. From this release on you may consolidate for profit centers.

Hierarchy

You cannot establish a hierarchy between business areas.

You can establish a hierarchy between profit centers. This may be important for information systems (displaying actual and planned values), for example.

Reporting

Business areas are used solely for reporting purposes. Information on business areas is stored in the general ledger.

Profit centers are used for internal reporting. As information on profit centers is stored in the special ledger, it does not affect the general ledger (parallel accounting).

Reliability of data

Your financial statements will not necessarily contain reliable data.

Your financial statements will not necessarily contain reliable data.

Objective

Reporting is geared towards external regulations.

Internal control.

Open item management

Can be used for business areas.

Cannot be used for profit centers.

Determination of key data such as ROI, profit-sales ratio

Possible for business areas.

Possible for profit centers that are used as investment centers.

Manual assignment of capital and taxes

Required for a business area.

Required for a profit center.