Which organizational units must be set up for effective billing?

The correct answer highlights the importance of both the sales area and the company code in the billing process within SAP S/4HANA.

The sales area is a crucial organizational unit that combines the sales organization, distribution channel, and division, which are essential for managing the sales transactions in SAP. It essentially represents the structure through which sales and distribution functions are carried out. Each customer is assigned to a specific sales area, which influences the pricing, availability of products, and other sales conditions applied during the order-to-cash process.

The company code, on the other hand, represents an independent accounting entity in SAP, responsible for managing its own financials. It plays a vital role in the billing process because invoices and related financial transactions must be associated with a particular company code for proper financial reporting.

Together, the sales area and company code ensure that all sales and billing transactions are executed correctly while meeting legal and financial requirements. Having both these organizational units set up enables effective tracking of sales data and ensures compliance with financial regulations when processing billing and invoicing.

In contrast, while sales organization and distribution channel or plant and storage location might play roles in the sales process or logistics, they do not encapsulate the entirety of the billing requirements as comprehensively as the