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What is Central Finance Scenarios in SAP S/4HANA?

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That question has been coming up a lot. The term Central Finance is used in different contexts and the meaning usually depends on the context. This can lead to different understandings and expectations. Many times I also get questions like “Can I do this or that in Central Finance?” I think it is important to know what can be meant when someone talks about Central Finance. That is why in this blog post I will try to answer typical questions around Central Finance. I will share my views on the different meanings of Central Finance and give you more insights into:

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    • Is Central Finance a system, a product, or a solution?

     

    What is Central Finance in a nutshell?

    In a nutshell, the picture illustrates the views of Central Finance as explain:

    • SAP S/4HANA as the system where Central Finance is running,
    • SAP S/4HANA for central finance foundation (aka Central Finance) as a product, that is based on SAP S/4HANA and comes with additional functionalities and
    • Central Finance Solution that covers additional aspects and the full scope for a Central Platform for Corporate Finance.

     

    SAP finance

    The Statutory Accounting Principles (SAP) are accounting regulations for the preparation of an insurance firm’s financial statements. The focus of SAP is to ensure the solvency of insurance firms so that they are able to meet the obligations to their policyholders.

    SAP S/4HANA CFIN (Central Finance) is an SAP S/4HANA Finance System installed as a side-car that receives Financial Accounting documents (except the line items that post to Fixed assets) in real-time from SAP or Non-SAP systems. It is a Non-disruptive deployment option to get capabilities of SAP S/4HANA Finance.

     

    SAP Central Finance Features:

    1. You can use the central finance to harmonize master data and replicate posting
    2. You can map master data from several source systems (SAP & Non-SAP) to harmonize master data in the central finance system either manually or using SAP MDG (a separate license for MDG).
    3. For enabling the transfer of data between your source systems and central finance, you need to maintain mapping that defines the relationship between data in the source systems (SAP and Non-SAP) and data in central finance. Mapping is used during the initial load and day-to-day transactional data transferring to the central finance system.
    4. Profitability segment data of an accounting document can also be transferred to the central finance system. ACCA is updated with profitability document numbers and reporting on PA can be achieved in the central finance system.

    Central Finance as an Approach to S/4HANA Profitability Analysis

    Central Finance is a deployment model of S/4HANA that facilitates Companies to move to SAP S/4HANA by bringing together financial information from multiple ERP’s (both SAP or non-SAP). Central Finance is an SAP S/4HANA system by itself.

    In the below example all 4 Company Codes Can run central functions dependent on their option selection on the following slide & Solutions available in the target landscape

    • Payments
    • Cash Mgt & Treasury
    • Credit, Collection & Disputes Mgt
    • Closing
    • Group Close & Reporting
    • Consolidation
    • Planning
    • Legal Compliance Reporting (ACR)
    • Shared Services

    Alternatively, the financials of 3 company codes that originate outside CFin can be merged into the 4th / a different company code. The above business functions can be performed in S/4HANA Cfin in this new company

    Value Scenarios for Central Finance

    Reporting – Transform Global Financial Reporting – Availability of global financial data in real-time and in great detail (drill down to the source document), and presented in a modern, user-friendly interface, leveraging the user experience capabilities of SAP Training in Noida Fiori and Design Studio. It allows for a common and flexible reporting structure

    Processes – Central Receivables/Payables Management, Cash & Treasury – Improves the back-office operations. Centralized Receivables management & Central payments allow increased efficiency. Higher productivity, security, and lower cost of operations. Centralized Credit Management, collections, disputes, rebates, dunning. Cash applications. Centralized Payments.

    Merger & Acquisition Template – Quickly absorb new organizations into reporting and financial controls

    Landscape transformation – Phased adoption of S/4 HANA Least disruptive S/4 HANA adoption strategy with immediate benefits linked to HANA in-memory processing, universal ledger, Fiori reports & common and flexible reporting.

       

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