Compounding is probably the most prominent example of a phenomenon at the border between word formation and syntax. Traditionally, word formation is the domain of morphology in which new words are formed on the basis of existing ones, whereas syntax is the component of grammar which combines words into phrases and sentences. The position of compounds depends largely on the question of whether or under which conditions they are considered words or phrases. Different language- specific traditions have emerged as to the precise delimitation of compounding and its position with respect to morphology and syntax. Against this background, it has been argued that it is not possible to define compounding cross-linguistically. If we reconsider the reason for distinguishing morphology and syntax, we discover that the central issue is which criteria are chosen to distinguish words and phrases. As a starting point for this distinction, I propose that words are naming units whereas phrases have a descriptive function. On this basis, I will present a definition of compounding that can be used crosslinguistically and demonstrate some of its consequences. I will then show that there are also phrase-like expressions that are not compounds and fulfil naming functions. If we accept the functional distinction between words and phrases, they should be treated as words and I will propose an analysis on this basis.