What Is SAP Central Finance?

SAP offers Central Finance as a deployment option to streamline processes and consolidate data for unified reporting and centralized processes regardless of the source systems.

In addition, Central Finance can be leveraged as a financial hub for processes outside of SAP S/4HANA. Central Finance has been available since the simple finance inception by the name of Central Journal. SAP rebranded Central Journal as Central Finance with several additional features. Nevertheless, there has been a lot of confusion among businesses and SAP user communities to truly understand what Central Finance is and its adoption strategies. The figure below shows how the different views of Central Finance can be perceived by business users and IT professionals.

What’s Central Finance?

Central Finance as a System

Central Finance serves as a financial data hub by receiving replication data from both SAP and non-SAP source systems. The financial hub can serve to integrate other solutions beyond SAP S/4HANA. With Central Finance, customers with complex and distributed landscapes across geographies avert high costs of implementations, which come with risks of migrating and upgrading to a new system. Central Finance as a system offers customers a quick way to adopt SAP’s architecturally advanced in-memory database and the latest reporting innovations with the Universal Journal without interrupting existing processes and systems with a sidecar approach. In this approach, Central Finance, in essence, replicates both financial and nonfinancial transactions from different source ERP systems into one single SAP S/4HANA system.

While replicating data from source systems, existing processes and system landscape aren’t interrupted. A nondisruptive solution means existing system processes remain untouched and current business operations aren’t affected. Transaction-level data is replicated into Central Finance and leveraged with SAP’s latest innovations—SAP HANA optimizations with built-in memory and cutting-edge user interface (UI) tools such as SAP Fiori, SAP Lumira, SAP Analytics Cloud, SAP Screen Personas, and so on. In addition, the system helps businesses transform mapping and harmonize master data, which leads to the SAP S/4HANA system of flexible data models. With harmonized master data and centralized data, you can perform planning, consolidating, and reporting activities.

Central Finance as a Product

This is delivered with the SAP S/4HANA suite as a product. To achieve goals of nondisruptive to existing processes and systems, Central Finance comes with its own tool set to support initial loads and replication: logging, mapping, error correction, initial load monitoring tools, reconciliation and comparison reports, and so on. Central Finance as a product is delivered with SAP Landscape Transformation Replication Server, SAP Application Interface Framework content, business configuration sets (BC sets), SAP Master Data Governance, and other supporting tools. Central Finance is scalable to adopt changes as business grows.

Central Finance as a Solution

You can streamline and centralize financial business processes in a single central location. Master data and configurations can be harmonized and transformed to support the streamlined and standardized processes. Centralized process execution capabilities can be introduced as an incremental step with the flexibility of business requirements to simplify business processes with SAP-delivered leading practices. Central Finance establishes the foundation for centralized financial processes, including central payment, central credit management, central collections and dispute management, central project reporting, central tax reporting, central closing, operational control, and so on.

The Central Finance system is built scalable, flexible, and adaptable for changing business requirements. With the implementation of Central Finance, the system becomes the single source of truth for financial data. Therefore, companies phase out source systems as they become out of support or outdated with numerous customizations.

The figure below displays important benefits of using Central Finance.

Central Finance Benefits

Here are a few additional general benefits obtained by implementing Central Finance:

Real-time replication of source data without any interruption to existing business operations. The advantage of a nondisruptive approach enables customers to adopt SAP S/4HANA in a phased approach without touching the existing system immediately. In an incremental step, you’ll phase out legacy systems at the customer’s convenience.
Centralized data in the Universal Journal, which provides a single source of truth for consolidated financial reporting. This enables faster consolidating and reporting and soft-closing capabilities.
Group reporting capability with real-time data received from multiple source systems within an enterprise.
Segment reporting capabilities to fulfill ASC 280 segment reporting.
Harmonization of master data across multiple source systems to improve quality of master data and deduplication. For example, harmonized master data and reporting structures are available across various entities for CoA, cost center, profit center, vendors, customers, plants, and so on.
Integrated business planning and forecasting for both short-term and long-term with centralized data.
Centralized services such as central payment or central credit, dispute, and collections capabilities. Processes are simplified by eliminating duplicate processes and efforts, for example, central payment, central tax reporting, shared services, and so on.
Personalized user experience with SAP Fiori and other presentation tools with SAP S/4HANA innovations.
Improved productivity as a result of using cutting-edge UIs such as SAP Fiori, SAP Lumira, core data services (CDS) views, and so on.
Centralized data for multiple system landscapes single source of truth via Central Finance’s Universal Journal (multiple ERPs into one global SAP instance).
Quickly integrate newly acquired companies into the system landscape via mergers and acquisitions.
Replicate all open items to different systems with management and real-time liquidity reports, bank balances, and cash positions.