Business unit
ConceptfoundationA unit of the enterprise with a manager, profit and loss responsibility and a level of autonomy. It can process transactions on behalf of many legal entities and is typically tracked in the chart of accounts.
What people get wrong
The confusions are the difficulty. Each one is a belief that sounds right and is not.
- That a business unit belongs to exactly one legal entity. A business unit can perform transactions on behalf of many.
- That a business unit is the same as a department. The business unit carries profit and loss; the department carries cost and headcount.
Recall it
What is a business unit responsible for, and how many legal entities can one belong to?
A business unit is responsible for profit and loss, has a manager and a level of autonomy, and can process transactions on behalf of many legal entities. It is not tied to exactly one legal entity, which is the reason the enterprise cannot be drawn as a single tree.
Memory hook: Business unit owns the profit and loss, not the payroll. If it did own the payroll, one unit serving two entities would be impossible.
Rests on COREHR-ORDER-001.
Taught in
Related
- Terminology glossary — what a term means, and what people get wrong when they use it