SAP Central Finance makes it possible to merge financial data from different systems in SAP S/4HANA. This page describes the platform and its possible applications in detail.
SAP Central Finance is the commonly used abbreviation for “SAP S/4HANA Cloud for Central Finance”. It is a cloud-based SaaS solution for the consolidation, harmonization and processing of financial data from various source systems. The concept is particularly useful for companies that have a heterogeneous system landscape in the finance area and want to create a central instance for managing their financial flows.
SAP S/4HANA Cloud for Central Finance, unofficially abbreviated to SAP CFIN, not only allows financial data to be merged. The platform also makes it possible to execute transactions in real time and make tax and accounting processes more efficient. In addition, the solution serves as a single point of truth for all of a company’s key financial figures and value flows. It therefore supports important business decisions and simplifies financial reporting at the same time.
Companies often opt for SAP Central Finance when their existing financial architecture is inefficient and a uniform, centralized control system needs to be implemented. As a rule, this need arises when companies have grown ERP structures with a mixture of SAP and non-SAP systems. The corresponding systems have often been implemented over years in different business units, subsidiaries or national organizations.
In such cases, data exchange between the individual accounting solutions is usually cumbersome. Real-time synchronization is virtually impossible. Instead, the data in the individual systems must first be determined and extracted before it can be laboriously aggregated at head office. This process is characterized by numerous manual interventions. In addition, inconsistent, qualitatively questionable data is characteristic of scenarios of this kind.
Another reason for introducing SAP S/4HANA Cloud for Central Finance is the lack of transparency regarding the overall financial situation. This is because fragmented system environments in particular lack a single point of truth for key financial figures. Real-time information from accounting is also not available. Financial managers can then only work with historical values or estimates. Current changes remain hidden. This makes it almost impossible to react quickly to new conditions.
Companies also rely on SAP Central Finance when their monthly and annual financial statements are extremely complex. This is not uncommon with redundant data storage in individual group companies. In such scenarios, consolidating the data relevant to the financial statements is often very time-consuming and ties up extensive personnel resources. In addition, the preparation of financial statements is only possible on certain reporting dates. A spontaneous query of the data, on the other hand, is not possible.
Furthermore, some companies have learned that the integration of new subsidiaries or the technical mapping of mergers represent very complex tasks. They therefore want to be prepared for such scenarios in the future, which typically arise from M&A transactions. This is another reason for introducing SAP Central Finance. The platform makes it possible to quickly establish a smooth connection to the financial systems of new group companies without having to immediately convert the entire ERP environment.
Last but not least, SAP Central Finance is relevant for the transition to SAP S/4HANA: Companies that cannot or do not want to take the quite complex and costly transformation to the new ERP system generation in one big step can use the “finance-first approach”. This means that the financial processes are transferred to SAP Central Finance first. The other areas of the company initially remain in the legacy system and are then migrated in stages. This approach reduces the risks of migration. It also frees up resources and budgets.
In summary, the use of SAP S/4HANA Cloud for Central Finance is expedient in the following initial situations:
There are roughly two target groups for SAP Central Finance. The first target group is large to very large companies that have group structures with numerous subsidiaries, international locations and correspondingly complex system landscapes. SAP CFIN provides such groups with a central consolidation and reporting tool that improves their financial processes and creates transparency on financial issues.
The second target group is companies that want to migrate to S/4HANA gradually and at low risk using the “Finance First” approach. As already mentioned, this approach is suitable for all companies that consider a “big bang transformation” to be too much of a challenge.
SAP Central Finance enables companies to consolidate and analyze financial data from various sources in a central system. The advantages of such a consolidation and reporting solution are:
The real-time consolidation of financial transactions gives companies immediate access to a standardized database. This improves financial transparency and reporting. In addition, decisions can be made on the basis of up-to-date and consistent data.
Whether SAP system or third-party software: SAP Central Finance enables the harmonization of financial processes across different ERP systems. This makes these processes transparent across systems and value flows traceable. Uniform standards can also be established and enforced across the Group. Furthermore, transactions can be executed centrally. Central business planning and group consolidation are also supported considerably.
Consolidating finance data in a central instance also makes it easier to meet international compliance requirements. A central element of this is the use of SAP Document and Reporting Compliance (DRC). This is an additional tool with which legal reporting obligations can be fulfilled efficiently and automatically worldwide.
SAP S/4HANA Cloud for Central Finance ensures consistent, trustworthy data. This is an ideal basis for carrying out reliable business analyses. In addition, the quality of the data naturally also increases the quality of reports.
The finance-first approach enables companies to migrate to SAP S/4HANA in a gradual and controlled manner. Instead of converting the entire system at once, only the finance area changes first. This has several advantages.
Firstly, locations, organizational units (modules), systems and processes can be flexibly migrated. Individual adjustments and optimizations can be implemented step by step. Day-to-day business continues to run smoothly.
In contrast to a complete system migration with the corresponding risk of failure, the finance-first approach technically relies on a so-called side-car implementation. SAP Central Finance is used as an interface between existing ERP systems (e.g. SAP ECC) and the new S/4HANA platform. This reduces the risk of technical disruptions, as financial processes are harmonized and tested before other modules are converted.
The approach also has financial advantages. As the entire ERP system is not replaced at once, the changeover can be spread over several budget years. This reduces the financial pressure. At the same time, change management is also less of a burden. Its resources can also be spread over a longer period of time. This is often reflected in a higher quality of change management, which in turn leads to greater acceptance among users.
Once the S/4HANA transformation is complete, SAP Central Finance does not have to remain permanently as an interface, but can simply be deactivated. This means that license costs are only incurred for the duration of the migration and not as permanent operating costs.
SAP Central Finance replicates financial and controlling data from various SAP and non-SAP systems in real time. The solution also ensures the harmonization and quality assurance of this information. From a technical perspective, the process can be outlined as follows:
First, the relevant data sources are connected to SAP Central Finance. There are two different methods for this:
Data is transferred to SAP Central Finance via the SAP Landscape Transformation Replication Server, which ensures standardized data processing. Posting documents from the source systems are not simply copied, but created as new documents – so-called shadow documents.
Each shadow document has a link back to the original document in the source system. This link is important as it enables synchronized processing and facilitates subsequent reconciliations.
Once replicated, shadow documents are treated like normal posting documents in CFIN. This means that
Before the replicated documents are posted in SAP Central Finance, they undergo a mapping process to ensure that they are compatible with the harmonized target objects in Central Finance. This conversion or harmonization is carried out using standard mapping technologies.
The Application Interface Framework (AIF) is used for monitoring and error control. It serves as a central monitoring tool to ensure that all transactions are processed correctly.
SAP Master Data Governance (SAP MDG) is used for the central management and harmonization of master data. This avoids data inconsistencies and ensures that all postings in Central Finance are based on consistent and high-quality master data.
SAP Central Finance is an integral part of SAP S/4HANA, but is initially inactive in the standard delivery. By purchasing a CFIN license, the consolidation system is activated – and with it its posting interface. The latter is the technical prerequisite for connecting various systems from which financial data is to be integrated.
The fee for an SAP Central Finance license is based on a company’s annual turnover and the number of replicated documents. This structure makes the finance-first approach for the S/4HANA transformation attractive for smaller companies too.
Important to know: Licenses for SAP Central Finance are only issued for SAP S/4HANA in the Private Cloud Edition. They are not available for SAP S/4HANA Cloud, Public Edition. In this respect, Finance First is only suitable for migration to the SAP Private Cloud.
It should also be noted that the license agreements for CFIN provide for a commitment period of three years.
SAP Central Finance and SAP S/4HANA Finance should not be confused with each other, as the solutions have different tasks and features.
SAP S/4HANA Finance is a core component of the SAP S/4HANA ERP suite and maps the central financial management of a company. It comprises the former SAP ECC modules SAP FI (Financial Accounting) and SAP CO (Controlling), which have been integrated into a new, optimized structure.
The most important functionalities of SAP S/4HANA Finance are:
SAP S/4HANA Finance is not suitable for integrating financial data from external ERP systems as standard.
SAP Central Finance, on the other hand, is not a standalone finance module. Rather, it is an extension of SAP S/4HANA Finance that enables cross-system consolidation measures for financial data from different ERP solutions. As already mentioned, CFIN provides companies with a special posting interface for this purpose, which they can use to connect financial data sources such as SAP ECC or non-SAP ERP systems to S/4HANA.
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