Many SAP R/3 users get confused as to the difference between the concept of Company and Company Code in SAP. To set things right, SAP R/3 defines a Company and Company Code seperately. In SAP paralance, a company is the smallest organizational unit for which legal financial statements can be prepared. On the other hand a company code represents the smallest organizational unit for which self contained set of accounts can be made.

Still Confused! Don't worry, here's an example, a company can have one or more company codes, but the opposite cannot be true. Now imagine a organization having operations in China, France, and the USA. At the time of defining the organization structure in SAP R/3, user can create three different and unique company codes one for each location. Each of these different company codes will use the same chart of accounts, but a user can define a different currency for each company.

So how do you define company code, go to transaction OX14 or the menu path listed below. SAP R/3 would require you to enter a alphanumeric four character string which would be a unique identifier for company code. Once you create a company code, any parameters relating to the company code can be viewed and maintained through transaction code OBY6.

Menu Path >> IMG >> Enterprise Structure >> Definition >> Financial Accounting >> Define, Copy, Delete, Check Company Code

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