How To Name Your Company Code

Dmitry Kaglik

November 11, 2012

SAP

11 Comments

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Each configuration project starts with the creation of Company Code.

Well, not exactly. You need to have much more done before starting Company Code creation. Like a Chart of Accounts (at least its name), Controlling Area, Posting period variant etc. But these are objects which are most likely unique across the implementation project. And they are not much used by end-users. I’ll talk about them separately.

But this is the Company Code which users talk about and key in most often. That’s why it is very important to get proper coding structure for your Company Code number.

SAP allows you to have up to 4 characters in this number. How should you use it? It depends on many parameters, and some of them are not so obvious.

SAP Teched day 1Let me give you some ideas before you start.

1. Small numbers. How many legal entities are in the project’s scope now and in the future? If there are only 1-2 companies, why not simply code them as 1 and 2. Yes, that easy. Just Company Code = “1” and “2”. You will laugh, but I have seen this numbering structure on one project. And this is not a small company. This is huge plant, but they have only 2 legal entities. Of course, having Company Code number = 1 is easy for users. They don’t need to make many strokes on the keyboard.

But let’s be honest. Most SAP projects work in environments where there are more than one or two legal entities. The companies have complex structures of daughter/mother companies, different branches, representative offices across different countries.

I can suggest to you 3 more strategies for a numbering convention.

2. Flat structure. Wherever your company is, whatever is its relationship with other companies in the group, each Company Code simply gets the sequential number. Yes, that can mean more effort for users later to work out the relationships between the companies. But in a very heterogeneous environment, especially where ownership of the companies can change from time to time, this is the useful approach. Which number to start with? It’s up to you. Start with 1, 1000, A, AAAA, whatever you feel like.

3. Hierarchy structure. You have main companies which have branches and representative offices. Branches in their turn can also have representative offices. In this case it would be better to stick to assigning a specific position in the Company Code number to a specific hierarchy level. Say, the first 2 characters are for the main companies, third is for branches and the fourth is for the representative office. In this case – 1500 – main company (number 15), 1510 – branch #1 of that company, 1505 – representative office #5 of main company, 1513 – representative office #3 of branch #1. Of course, this structure does not allow you to specify the geographical location of each Company Code. But is that so important?

4. Geographical structure. Do you have companies in different countries across the globe? In this case you may set a country code in the Company Code. This can be a simple 2-character ISO country code (US, GB, AU etc). Or you can make ranges for regions and then number companies within the area. Say 1xxx – companies in Europe, 2xxx – companies in Americas, 3xxx – companies in Asia.

Of course, I don’t mean to tell you that you can only stick to these 4 rules. You’re the consultant at the project. You can propose different strategies to your management or key users, so they can approve one or another approach, or give you some other ideas. And, of course, mix&match strategies are still possible. How about mixing numbers 3 and 4?

And finally, some rules of thumb.

  • Use the full set of characters provided for the field. Of course, if you have Company Code “1”, you can still have only 1 character. But if you have 100 companies, then it is better to call them 0001, 0002, 0038, 0100. Everyone will get used to the idea that Company Code should have 4 characters and you’ll get less errors because of that.
  • Never use a nation-specific alphabet for numbers. Cyrillic? Japanese? Hindi? No, please. First of all, you will get issues with the SAP support team (I mean from Big SAP) who might not have this layout on their keyboards. Then, you end up with people in multinational companies who do not understand the different alphabet at all. I would advise you to stick to Latin characters and digits only. Or, even better, only use digits.

What was your experience in proposing Company Code numbers to your projects? How many options did you propose? Were they different from what I mentioned above? Please share your ideas in comments.

Image: Ali Samieivafa

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11 Comments

  • twitter_Ross_Boardman on November 20, 2012

    Hi Dmitry,

    Another couple of suggestions for naming:

    1 Use the initials of the legal entity. If a business is called ACME then why not keep that as the company code.

    2 Country codes and local GAAP. I have used the following with some success. Each company code is represented by the country code an odd number. Start at 11 to save confusion with SAP delivered standards. eg US11 Each of these odd company codes works to the group GAAP. If the local GAAP is different then the next even name posts local adjustment only (US12). The two company codes summarised are the local reports.

    With numerical company codes there is a common practise to use a theme across all other modules. For company code 1000 the cost centre ranges used could be 1000000000 to 1000999999. It does make sense but too rigid for my own use as it makes no difference between the size of entities so can be a burden.

    All the best,

    Ross

  • facebook_joel.vanormelingen.5 on December 15, 2012

    not a FI guy but HR I was told that the dummest thing one can do is use so called smart coding, don’t try to give additional meaning to a company name by playing with numbers!!! In the end it will bite you in the a…, if something changes your rules do no longer apply and then you go and tell your customer that they can forget about the hierarchy or can do a complete conversion?? use it like sap suggest it’s just a label no other meaning there are other options for this.

    • Dmitry Kaglik on December 15, 2012

      Almost all of my projects used smart coding in CoCodes. And nobody still complained. You cannot move the CoCode into different country, for example. That makes geo-based coding bulletproof.

  • David Schenz on February 20, 2013

    This is a great post. Often times companies with complex legal structures will have numbers already assigned to each legal entity. It’s best to try and harmonize the company code numbering to that legal numbering.

    One pitfall I see often is that companies with numbers for company codes develop custom program with the assumption that the company code will always be a number. Then, a need for a CoCd with letters comes along and a lot of effort is required to find the custom development issues.

    • Dmitry Kaglik on February 20, 2013

      David, thank you for your input!
      To be honest, I’ve never seen the use of Company Code code as a number. It can be numeric, but I would never recommend the use of mathematical relations between the codes. Thanks for warning, though!

  • Mahmoud Habeeb on February 24, 2013

    Thanks.
    It’s really useful advice
    I’m using the mentioned ideas.

  • Måns Nilback on June 9, 2013

    As far as I know, you should avoid naming a company code 0001, since this is the template ccode delivered by SAP, and config risk being overwritten, at least for Brazil country specific settings.

  • Swaminathan K N on November 14, 2014

    It would always be good to have a numeric as a company code. It is then simple to change the name, in case the company’s name changes

    • Dmitry Kaglik on November 22, 2014

      You are right that name change is much easier when it is not part of the code.

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