A business unit is a distinct division within a company that focuses on a specific set of activities or functions. Each business unit is responsible for its strategy, operations, and performance. Business units can focus on specific markets, products, or services, enabling the company to cater to diverse customer needs and market demands. In a large corporation, business units might include divisions like marketing, sales, research and development, or customer service.

In Conga CLM, business units are primarily used on the client side. For instance, consider an IT company, TSI Corp., which operates globally and offers various IT services. TSI Corp. may have multiple business units — such as Software Development, Cloud Services, Cybersecurity, or IT Consulting — each focusing on a specific area of expertise. These business units allow the company to specialize in diverse IT services while maintaining flexibility, compliance, and effective management of global operations and contracts. They may also be referenced internally in Conga CLM to enable reporting, drive approval workflows, and manage supplier associations.

For external parties (suppliers or customers), however, only their Legal Entity details are captured in contracts. For example, if TSI Corp. signs a contract with a cloud provider like Microsoft Ireland Operations Ltd. (for Europe) or Microsoft Corporation USA (for North America), the legal entity name of Microsoft is what appears in the contract — not Microsoft's internal business unit.

Business units are therefore relevant internally to the client (TSI Corp.), while legal entities apply to both the client and external parties (suppliers or customers), ensuring contracts are legally enforceable and compliant with regional laws.