What is difference between company and company code in sap?

Consider below example to  understand the relationship between company code and company

Infosys is a group company with operations in many countries.  Each subsidiary company is legal unit and hence each has to generate balance sheet and profit & loss statement as per respective country’s accounting principle.

Infosys India has to generate financial reports for Indian government.

Infosys China has to generate financial reports for China government.

Financial reports (balance sheet/ profit & loss/ others) are also required at group level. For preparation of financial reports for Infosys group, consolidation of financial data of all subsidiaries is needed.

Hence sap should be capable of providing financial reports for individual units as well as consolidated data for the group.


To achieve this via sap, we need to set up appropriate enterprise structure in sap.

Legal units are created as company code.

Group Company is created as company.

Company codes are assigned to company.

company code assignment to company

Above picture showing legal units (subsidiaries) is created as company code.

Company code is assigned to group (company).



Another requirement is that legal unit (company code) will be preparing financial reports in respective country's currency in accordance with respective countries accounting principle.

Infosys China will be preparing financial reports in CNY currency.

Infosys Australia will be preparing financial reports in AUD currency.


For group (company), reporting has to be done in group country's currency. 

Since Infosys group belongs to India. Hence consolidation of financial data for group reporting has to be done in INR currency.


Challenges in consolidation

  • Different currency: Each country's local currency is different but consolidation has to happen in group currency


  • Different countries have different financial year for reporting.

         India's financial reporting year is (1st April to 31st March)

        China's financial reporting year is (1st Jan to 31st Dec)


  • Different countries follow different accounting principles. Bur group consolidation has to be done using group's accounting principle.


Hence consolidation of data for group's financial year becomes difficult.


These practical requirements are handled in sap using concepts of parallel currencies and non-leading ledger.

To read about parallel currencies and non-leading ledger: http://sapconcepthub.com/non-leading-ledger-parallel-accounting-example/