SAP Central Finance is a product and deployment option that enables you to implement S/4HANA Finance without disrupting your existing source systems. Whether you’re intending to go down the full S/4 HANA route, are already doing so or don’t yet have such plans, it’s a powerful tool for aligning and transforming your data from multiple systems – both SAP and non-SAP. Here we look at some broad use cases. Prepared to be surprised how much Central Finance could benefit you.
Central Finance is all about improving your finance data quality and transactional efficiency without disruption. It enables you to connect your distributed system landscape to a centralised SAP S/4HANA Finance system. If this sounds too technical, what it really means is that it gives you a harmonised data environment that will facilitate financial reporting, planning and standardised processes.
In the course of more than 20 SAP S/4Hana Central Finance projects with clients, we’ve identified four broad use cases. They’re by no means exhaustive, but they should give you some food for thought:
- Multiple ERP platforms
Central Finance is a powerful tool if you want to streamline an environment of multiple ERP platforms or instances but don’t want to embark on a full-blown project to consolidate your processes and systems. It helps by enabling you to replicate enterprise financial data. Because this is real-time replication, it gives you interim views of data and a doorway to central processing scalability. - Aggressive M&A activities
Central Finance could be a useful option if you have an aggressive merger and acquisition strategy, an inorganic growth model or an evolving business model. It enables you to rapidly integrate acquisitions and unwind changing and evolving business models. It also gives time for acquisitions to go through their incubation period. And it enables you to operate newly acquired entities as independent business units while still having the control that a central finance view gives you. - Entry point to the S/4HANA journey
Central Finance is a great entry point if you’re considering embarking on the S/4HANA journey and want to see what it can do first. With this option, finance goes digital first, adding value and building confidence in S/4HANA’s capabilities. It’s a stepping stone to future waves of implementation that decouples the risk of deploying the full platform. Central Finance will stabilise your financial and management reporting as a solid basis for transforming downstream applications and reporting. - Solving complex business problems
Central Finance is a powerful way of harnessing enterprise financial data to solve complex business problems. It can help you get the most out of financial data to address the cost of sales, including eliminations. It can also help with global allocations, intercompany reconciliation and netting, and assortment planning.
What about the hard financial benefits?
There’s already plenty of evidence suggesting that the IT benefits provided by Central Finance result in substantial potential savings (varying from 5% to 30% depending on the area):
- Data transparency
Central Finance gives you clear visibility in intercompany flows and reduces the time spent on manual data tasks. - Tax management
Here Central Finance enables you to capture sales and harness tax opportunities and get a clear view of property tax status, payment requirements and refund opportunities. - Enabling EPM (enterprise performance management)
Central Finance provides you with a single integrated planning process, with real-time data extraction and consolidation, plus a foundation for a common information model. - Statutory reporting
Central Finance increases the granularity and transparency of expense data, reduces the money left on the table for withholding tax, and enables real-time updates to your billing system to reflect tax changes. - Cash management
Central Finance enables savings by reducing manual cash planning and reconciliation and increasing the visibility of your overall cash position. - Process optimisation
Central Finance enables you to run compliant, real-time financial accounting processes and real-time intercompany reconciliation as well as increase automation and eliminate manual work.
What about the disruption to business?
As we said at the beginning, all this is possible without widespread disruption to your existing source systems. The typical Central Finance journey consists of three stages, each with defined goals and serving as a stepping stone to the next phase. We can help you move from Central Finance as a system of report to a system of record, before helping you create the digital core for wider S/4HANA transformation.
At each stage you’ll experience the benefits, whether it’s an acceleration in M&A, easier implementation of new business models, more scope for robotic process automation or simply a greater ability to innovate.
If you’re interested in finding out more, check out our paper on Central Finance and talk to us about you could start harnessing the benefits for your business.
