Profit Center Derivation in SAP

In a ‘normal’ SAP organization structure in the NewGL, the profit center in SAP is the smallest level in which P&L and Balance Sheets can be created for a management entity. Deriving the profit center in SAP is a complicated process. It’s critical to consider the sources of GL postings and how each of those postings will get a profit center. In this post, we’ll examine the most common ways that the PC is derived and start to get a feel for the document splitter.

Manually Assigned Profit Center

The easiest way to assign a PC is to manually assign it in the posting. Here we can see the user keying the profit center onto the entry in FB50.

Profit Center being manually entered  (1) FB50

Derive the Profit Center from a CO assignment

Second, for entries that have a CO item assigned – such as a  cost center, WBS element, real estate contract, and so forth, the profit center can be derived from the CO object. Below, we have a cost center that is assigned to a profit center.

Cost center creation with profit center assigned  (2) KS01

When a posting uses the cost center just created, the PC will be automatically derived in the posting.

Using the cost center to derive the PC  (3) FB50

From the material master

On a material master, the PC is populated on the “Costing 1” view. The PC on the accounting view will be used on SD & MM flows on their downstream accounting documents.

Profit Center on a Material Master  (4) MM01

It’s critical that the PC be populated as part of standard material master setup. Otherwise, postings will likely err out.

Defaulting via Configuration

For cash clearing, house bank GL, and a few other accounts, configuration can be done to enable the PC to be derived based on the combination of GL account and company code. This configuration should be used carefully as a default is generally not as detailed as direct assignment would be.

Default Profit Center per CoCd (5)Financial Accounting (New) -> General Ledger Accounting (New) -> Master Data -> Profit Center -> Assigned Default Profit Center to Accounts

Bank accounts and sub accounts tend to use a default profit center since there is no option in either lockbox processing or in electronic bank statement that is easy to populate the profit center. This also makes some sense. Cash is usually held at a corporate level and not in a management division.

 Substitution

For more complex logic on assigning profit center, substitutions can be setup in OBBH and GGBH on the Financial side and Controlling side respectively. Profit center substitutions should be used with care as if they are needlessly complex or used in lieu of more careful configuration and design, they will become unwieldy to maintain and to understand. Here, the profit center is populated with a constant “1” when GL account 511050 is used.

FI Substitution using OBBH (6) OBBH

Adding the Profit Center through the Document Splitter

Definitely the most tricky and most used method is derivation via the document splitter. The document splitter is a feature of the New General Ledger that ensures that all postings can receive a profit center – including subledger, balance sheet, and so forth. The complete document splitter will be explored in a later series of posts, but I’ll write a few words now.

First, there is entry view and general ledger view. The entry view of a posting is what the user enters and what is used for subledger purposes. The GL view is used for financial statement preparation and reporting. Most users look at the entry view of the posting. Usually only GL accountants care about the GL view.

What makes the splitter powerful is that even subledger postings can receive a profit center, and even more importantly, can receive more than one profit center. That enables the receivable on a sale that is split between two profit centers to receive both profit centers.

In the entry below, we can see that an invoice is being raised with expense items in two different profit centers.

FB60 with Document Splitting  (7) FB60

When we look at the entry view, there is only a single AP item against the vendor. But when we look at it in GL view, the AP line is split into two line items.

FB03 in Entry View  (8) FB03

FB03 in GL VIew (9) FB03

In our following series, we’ll have a look at all of the major ways to configure document splitting. Hold on to your seats!

T-Codes, Config Paths, etc   [ + ]

1, 3. FB50
2. KS01
4. MM01
5. Financial Accounting (New) -> General Ledger Accounting (New) -> Master Data -> Profit Center -> Assigned Default Profit Center to Accounts
6. OBBH
7. FB60
8, 9. FB03

16 Comments

Carolina John says:

Good explains.
Thanks

David says:

Thanks John 🙂

idreddy says:

Clearly explained. Applicable from ECC-5.0 on words.

David says:

Thanks 🙂

Tijani says:

Think you for your useful document.

[…] alluded to in my last post, the document splitter plays a crucial part in the derivation of profit center, and consequently in […]

Mahmoud says:

Great Document David,

I believe you can also add OKB9 to your list as another way of deriving a default Profit Center from a particular Cost Element.

Mahmoud

David says:

Hi Mahmoud –

Thanks for the point 🙂 You’re absolutely correct that OKB9 can be used to default the profit center. Normally, I would use FAGL3KEH (which is the same as outlined in the article) as it’s more in line with the Tau of the NewGL, but either would certainly work well, and it OKB9 might be more elegant for a CO heavy implementation.

Karsten says:

Great document. Helped me solve an issue.

Haris says:

Thanks David,
Awesome Document, thanks for sharing..

Ab says:

You are always a great help David and so nice of you, you are always a click away for help on SAP FI tops. Thanks for taking the time in sharing your valuable knowledge with us all. Like other things in life and which applies to SAP too, if you don’t use it, you lose it. I always come back to your blogs for things I have forgotten. THANK YOU!
Ab

Surinder says:

Excellent article David keep it up.

Surinder says:

Excellent article David keep it up.
Can we have same level discussion for busiess area and functinal area determination?

Thanks

suhail says:

great document.

suhail says:

can we get some good knowledge about controling too. thanks in advance.

Kumar says:

Hello David,
Would like to know the document of trading partner to derive partner profit center in general ledger.Please send me if you have one.

My email is Kumarjaiswal.fico@gmail.com

Thank you,

Regards,
Andy

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