Many organizations still have questions on SAP Central Finance (CFIN) while others have already successfully embarked on this journey. We want to give you insights on CFIN, its benefits, particularly in the realm of SAP finance and controlling and address some technical aspects.
Introduction to SAP Central Finance
SAP Central Finance is a central SAP S/4HANA system for finance and controlling.
This central finance system is connected to source ERP systems (SAP and non-SAP) with real-time replication of financial transactions and financial data, improving the visibility of financial processes and the flow of information. The approach ensures a smooth integration without disrupting existing systems.
The central SAP S/4HANA system empowers centralized transaction execution, business planning, group consolidation, and reporting and analysis for comprehensive financial management.
It is an interesting deployment scenario for clients with a complex and heterogeneous landscape without disrupting the existing (local) ERP systems and as a first step towards the full SAP S/4HANA adoption for their SAP finance module.
SAP S/4HANA in a nutshell
SAP S/4HANA is the next generation of SAP solutions built on SAP HANA technology.
The architecture simplifies the data model and improves business process execution with a new user experience called FIORI. This simplified data model is the key driver to reduce reconciliation efforts and provide greater flexibility in reporting, which is a key benefit for the finance function.
SAP Central Finance (as a product) can be used to receive data centrally from multiple source systems and act as a robust SAP finance system.
What is SAP Finance and Controlling (SAP FICO)?
SAP FI modules handle financial transactions and reporting within the SAP ERP system, including tasks such as general ledger and accounts payable.
SAP FICO combines these financial capabilities with controlling (CO) functions to provide a complete view of an organisation's financial health, which is critical for strategic decision-making. It's particularly valuable for MBA finance graduates, matching their financial management skills.
The challenge of a decentralized ERP system
We see many organizations that have a fragmented and decentralized ERP system landscape. This can be the result of acquisitions, a decentralized organizational structure, or a lack of IT strategy and governance focused on consolidating the ERP environment.
The downside is less visibility across the organization to cross-system information and limited ability to centralize financial and management processing, enable shared services, or centralize financial reporting and insight. This leads to increased operational costs and sub-optimal decisions, which can sometimes be very costly.
As a result, finance organizations are looking for ways to consolidate all relevant global financial data from disparate SAP and non-SAP systems into a single platform. This approach not only helps merge data efficiently, but also enhances strategic financial management. By doing so, they can achieve the efficiencies of centralized processing and centralized, cross-system reporting without necessarily having to upgrade their decentralized source systems.
CFIN as a solution and deployment scenario
From a technical perspective, Central Finance is an "add-on" based on an SAP S/4HANA system. Central Finance receives financial accounting transactions from SAP or non-SAP ERP systems using a toolset of additional functionality such as SAP SLT to enable real-time replication. This direct replication is in contrast to a data warehouse where data is extracted, transformed and loaded without any real integration.
SAP Central Finance enables the finance function of a company to benefit from the key advantages of SAP S/4HANA. The functionality helps streamline financial processes for enhanced efficiency. SAP Central Finance is therefore described as a steppingstone to a larger SAP S/4HANA transformation.
Since there is no need to change the ERP landscape in the short to medium term, existing systems and system landscapes remain in place. They are connected to the SAP Central Finance system, which ensures the integration of the general ledger, accounts payable, asset accounting, and financial statements for comprehensive financial reporting.
Key advantages of SAP Central Finance for optimized financial management
Central Finance allows companies to streamline financial processes with real-time data replication from SAP and non-SAP systems. By centralizing transaction processing, invoice payment monitoring, and expense reporting, companies gain greater visibility and control over their financial operations.
The system simplifies group consolidation, streamlines reporting, and provides a single, enterprise-wide view of financial data. With improved bank account management and seamless integration with existing SAP financial modules, Central Finance helps to standardize processes and drive efficiencies across complex landscapes.
CFIN: Empowering CFOs for Finance Transformation
SAP Central Finance (CFIN) is a strategic enabler for modern finance.
It replicates real-time data from SAP and non-SAP systems into a central SAP Cloud ERP private platform (formerly known as SAP S/4HANA Private Cloud) without disrupting existing ERP landscapes.
With our Empowering CFOs offering, KPMG supports finance leaders by:
meeting ESG disclosure requirements
creating a single source of truth for financial data
accelerating integration or divestiture of entities
enhancing decision-making with real-time insights
- reducing information management costs
- delivering timely, trusted reports and KPIs
Our Powered Enterprise framework uses modular, scalable, and technology-agnostic tools tailored to your industry to accelerate transformation.
Frequently Asked Questions about Central Finance
At KPMG, we advocate prioritizing Central Reporting to standardize your financial data with consistent dimensions and KPIs, regardless of the diverse nature of your business. Implementing central processing as a subsequent step will then enable you to effectively leverage unified financial data and optimize your efficiency.
One of the core strengths of SAP Central Finance is its ability to maintain data accuracy and consistency across different financial systems.
By using real-time replication and integration mechanisms such as SAP Landscape Transformation (SLT), Central Finance ensures that financial data from various sources is harmonized and up-to-date. This eliminates discrepancies that can arise from data lag and manual data entry, providing a reliable single source of truth for financial reporting and analysis.
Yes, SAP Central Finance is designed to handle the complexities of multi-entity and multi-currency environments. It allows organizations to consolidate financial data from different entities, regardless of their geographical location or local currency.
This capability is particularly beneficial for multinational corporations, as it provides a unified view of financial performance across all subsidiaries and divisions. Additionally, Central Finance supports currency conversion and revaluation processes, ensuring accurate and consistent reporting in the corporate currency.
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