HCM#011: What is Business Unit and How do we create it through ESC ?

Business Unit works as an Unit of an enterprise that performs one or many business functions that can be rolled up in a management hierarchy.

Normally, it will have a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss.

Use business units in the following ways:

– Management reporting

– Processing of transactions

– Security of transactional data

– Reference data definition and sharing

Perform one or many business functions like Payables invoicing, Payables payments, Procurement, Sales, Marketing etc.

Business function logically indicates a presence of a department in the business unit with people performing tasks associated with these business functions.

Optionally, you can define a hierarchy of divisions, business units, and departments as a tree over HCM organization units to represent your enterprise structure.

When a business function produces financial transactions, a business unit must be assigned to a primary ledger, and a default legal entity. 


Business unit set up is done at Create Business Unites tab.

Below is the pictorial representation:

There are two ways you can define your BU through ESC,

Generating Automatically, This will generate BU based on your Legal entity defined.

Second way, you can define the BU manual entering the information. 

Next Tab is, manage business units, this is used for configuring the additional information related to BU. Like which country it belongs to, code and status.