This post covers trends in financial close, including hard close, soft close, continuous accounting, fast close, and predictive close.
We’ll then look at how financial close has advanced with the introduction of SAP S/4HANA Finance due to changes in the financial data model (that is, table ACDOCA), resulting in several positive impacts. Other advantages will also be covered, including significant advances in the user experience (UX) and the options for Central Finance and group reporting.
The drive for a faster financial close has likely always been around. From pencils and paper, to punch cards, to SAP S/4HANA running on hyperscalers, modern computing power and memory far exceed those of the IBM computers that calculated orbital flight for Project Mercury in 1961, a key turning point for predictive analytics.
Even so, some organizations today barely complete a month-end close before the cycle starts again. Some trends have been in place for some time, while others are only now gaining a foothold with the introduction of SAP S/4HANA’s predictive ledger and SAP Business AI. Let’s explore some of the long-standing trends:
With hard close, all the financial records of a certain period have been processed, and no more financial activity is allowed for that period. Hard close is always a backward-looking process focused on past actual financial data.
With soft close, the books are closed using an abbreviated closing procedure. By using a soft close, finance departments can issue financial statements very quickly and then return to their normal day-to-day activities. A soft close can be executed multiple times and anytime during an accounting period without waiting for a period end. Nevertheless, a soft close also leads to lower accuracy in the produced financial statements; this makes the results impractical for external reporting purposes, but they might still be good enough to fulfill management reporting needs.
For instance, you could use SAP Advanced Financial Closing to run a typical month-end closing task multiple times within the period. This is done quite commonly for processes such as order or project settlement to identify issues in settlement rules earlier and reduce load from the final execution at month end.
With fast close, financial close activities are accelerated and shortened through gains in efficiency and speed. You can imagine it like a quicker hard close. SAP Advanced Financial Closing provides many capabilities, including automated closing jobs and workflows, that enable a faster close while keeping the highest level of quality and accuracy.
Predicted close means analysis and closing activities are executed on the basis of predicted actuals instead of actual financial postings. SAP has implemented predictive accounting features in multiple end-to-end business processes to allow earlier insights. One example is the order-to-cash process. With SAP’s predictive accounting, it’s possible to create financial postings from predicted logistics goods issue and billing process steps during the initial sales order entry. These postings are stored in a separate prediction ledger and reversed as soon as the real goods issue and billing processes take place. SAP Advanced Financial Closing doesn’t yet enable predicted close as of the time of writing.
Predicted close, often coupled with predictive accounting, is a key promise of digital transformation. Similarly, artificial intelligence (AI) and machine learning are other capabilities of digital transformation and, depending on the specific predicted close solution, may be the underlying enabling technologies. These trends are possible as a result of more powerful hardware at more cost-effective pricing and have enabled the current era of modern computing based on servers with massive amounts of RAM for in-memory computing, columnar databases for faster processing (SAP HANA), and code rewrites to take advantage of the same.
How these technologies are deployed is an equally important topic for companies in their digital transformation journeys as they shift from on-premise solutions to the cloud and software as a service (SaaS) offerings, which makes these capabilities more cost effective.
Moving IT workloads to the cloud is part of a shift in preference from capital expenditures (CapEx), especially for large projects, to operating expenditures (OpEx). While SAP has yet to containerize the ERP system to allow for pieces of processes to be shifted to the cloud, SAP BTP enables side-by-side development that can push selected workloads to the cloud. This enables a cleaner core and lower total cost of ownership (TCO) when considering more long-term value due to the effort of keeping software up to date, including the cost of testing the software prior to deploying in a production environment.
Ultimately, SAP S/4HANA comes by default with a lot of innovations, as referenced earlier. SAP HANA is the new in-memory database, the backend tables (ACDOCA, MATDOC, etc.) have changed, and the SAP S/4HANA code paired with SAP Fiori make for a more intuitive and pleasant experience that can be used on any device with a browser. As there are whole books and many articles on the topic, we’ll focus only on some of the more relevant innovations in this post.
The introduction of the Universal Journal is a critical improvement that builds on top of the new general ledger introduced in SAP ERP. Multinational companies who needed to satisfy local legal requirements typically fulfilled them using local statutory accounts to segregate postings and reporting. With the advent of the new general ledger, leading and nonleading ledgers were made available to keep the accounts the same, but with the ability to use them as local requirements dictate. The Universal Journal, just like the new general ledger before it, enables document splitting by profit center, by segment, or other criteria, to have a full set of books on that splitting basis.
SAP S/4HANA also makes embellishing data easier with extensibility for key fields that naturally flow to standard transactional, reporting, and analytical SAP Fiori apps. Actual costing with periodic updates provides the best of both standard costing and moving average price. The material ledger, which in SAP ERP was typically limited to the required countries like Brazil or where parallel valuations and multiple currencies are required, is further extended from a usage perspective in SAP S/4HANA. Lastly, financial consolidation makes its return to the core ERP from SAP Business Planning and Consolidation (SAP BPC) in the form of SAP S/4HANA Finance for group reporting, which was built on SAP Enterprise Controlling Consolidation (the component formerly known as EC-CS).
Managing actual costing and parallel valuation in an increasingly globalized economy is more complex than ever. This series explains core Material Ledger concepts, capabilities, and configurations. Learn how the Material Ledger helps organizations handle inventory, exchange rates, regional legal requirements, and market fluctuations. Get access to course recordings by clicking the banner below.
Editor’s note: This post has been adapted from a section of the book Financial Close with SAP S/4HANA by Francisco da Cunha, Piotr Górecki, Mandar Kashikar, Howard A. La Kier, Sonam Pawar, Rodney Reed, Marc Six, and Srinivas Sriram. Francisco is a leader in the Europe Middle East and Africa Center of Competence and TruQua EMEA, an IBM Company. Piotr is a program manager and enterprise architect in the IBM Global SAP Center of Competence. Mandar is a senior managing consultant with IBM consulting. Howard assists clients in their digital transformations enabled by SAP ecosystem solutions as the financial transformation go-to-market and delivery leader for TruQua, an IBM Company. Sonam is a senior managing consultant with extensive experience running business transformation programs enabled by SAP finance and related solutions. Rodney is a senior managing consultant in the SAP practice at IBM Consulting. Marc is a partner at TruQua, an IBM Company. Srinivas is the group reporting North America leader at TruQua, an IBM Company.
This post was originally published 4/2026.