What is 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 ABC 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. A company code can have several plants.

A plant can also be assigned to a business area. A business area can be assigned to several plants.
Material valuation can be set at company code level or plant.

SAP FICO Company code configuration
SPRO path for company code creation

In short :
This is used for the consolidation purposes in SAP
Creation of a company is optional in SAP and is mandatory if ECCS is used
Company is used in ECCS( Enterprise Controlling Consolidation System) Module of SAP for consolidation purposes
Company can be assigned to one or more company codes
Creation of Company SPRO > Enterprise Structure > Definition > Financial Accounting >
Maintain Company

14 thoughts on “What is Company Code?

  1. rajani says

    Thank you for the explaination.
    Still I am little confused about company code and what does “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). ” please explain.

  2. Raman Srinivasan says

    SAP is ocean. I have done this course in FI but to be certified FOR lack of clarity on various basic issues like this.YOur explanation is good and timely too..Thanks.

  3. s,apparao says

    while creating a company there is one option that is “name of company 2 . when will it use? what is the use of the name of company 2. please explain. please forward the answer to my mail id. mail id is [email protected]

  4. s,apparao says

    hi.how to open open and closing posting period in ob52 for a particular month exactly instead of opening whole financial year.and what is the process for that.

  5. Canh Nguyen says

    Hi everyone,

    How can the SAP using company code to transacsion with other company using Dynamics AX ERP system

  6. priyanka says

    I am new to SAP, learning myself….I have a query
    Company code is a unique number then why a company can comprise more than one multiple codes?

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