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Central Finance as an approach to a S/4HANA run Enterprise

Central Finance as an Approach to S/4HANA Profitability Analysis

Central Finance is a deployment mode of S/4HANA that facilitates Companies to move to SAP S/4HANA by bringing together Financial information from multiple ERP’s (both SAP or non-SAP). Central Finance is a SAP S/4HANA system by itself.

In the below example all 4 Company Codes Can run central functions dependent on their option selection on following slide & Solutions available in target landscape

  • Payments
  • Cash Mgt & Treasury
  • Credit, Collection & Disputes Mgt
  • Closing
  • Group Close & Reporting
  • Consolidation
  • Planning
  • Legal Compliance Reporting (ACR)
  • Shared Services

Alternatively,  the financials of 3 company codes that originate outside CFin can be merged into the 4th / a different company code. The above business functions can be performed in S/4HANA Cfin in this new company

Value Scenarios for Central Finance

Reporting – Transform Global Financial  Reporting – Availability of global  financial data in real-time and in great detail (drill down to the source document), and presented  in a modern, user-friendly interface, leveraging the user experience capabilities of SAP Fiori and Design Studio. It allows for a common and flexible reporting structure

Processes – Central Receivables/Payables management, Cash & Treasury – Improves the back office operations. Centralized Receivables management & Central payments allows  increased efficiency. Higher productivity, security and lower cost of operations. Centralized Credit Management, collections, disputes, rebates, dunning. Cash applications. Centralized Payments.

Merger & Acquisition Template – Quickly absorb new organizations into reporting and financial controls

Landscape transformation – Phased adoption of S/4 HANA Least disruptive S/4 HANA  adoption  strategy with immediate benefits linked to HANA in-memory processing, universal ledger, fiori reports & common and flexible reporting.

Note: Not a supported pathway as of S/4HANA 1809 to bring logistics on as a second step. But specific “Customer projects” are underway.

 

Central Finance Applied to a “Customer Environment”

Restrictions at SAP S/4HANA 1809 – Courtesy SAP

Central Payment for SAP Central Finance is released in SAP S/4HANA  1709 with the status “Released with Restrictions”. SAP will use Pilot Note 2346233 to limit read access and list restrictions, ensuring that customers understand and accept restrictions

Restriction Potential Mitigation
Logistics processes in the source systems that depend on actual clearing status of invoices in the source system may need to be modified: with the technical clearing of the documents in the source system, AP and AR reports in the source system do not indicate the actual clearing status.

No changes planned in standard Central Finance product (except for down payments)

In implementation projects, custom scenarios can be built to push status back to source system (not recommended). Logistics process can be modified to query status in the Central Finance system.

Down Payment integration with SD is supported and down payment integration with MM should be solved by project. Down Payment integration with MM is not included in 1809, but remains a roadmap topic for Central Payment.
Credit card can be used only when settlement run is triggered from the source systems. The clearing and settlement status from source systems can be centrally monitored in the Central Finance system
The historic open items that you have in the source systems before switching to Central Payment have to be paid and cleared in the source systems. To avoid double payment in both source and Central Finance system, you can apply SAP Note 2654572 to set ‘Payment Block Reason’ to block the payment for legacy open items in the Central Finance system. Payment for historic open items in Central Finance system with setting technically cleared indicator in source system is not supported in 1809, but remains a roadmap topic for Central Payment.
When you run FS-CML(Consumer and Mortgage Loans) in a company code in source ERP systems, you cannot activate Central Payment for the company code. No change planned
Paying centrally also requires VAT and withholding tax reports to be executed in the Central Finance system. There are restrictions on tax reporting. It needs to be verified for each company code if tax reports show the correct values in the Central Finance system before Central Payment activation in the productive system
For the scenario that customer’s source system(s) is third-party system(s), note 2597587 should be implemented if a customer wants to use Central Payment functionality.

Following Restrictions occur for re-activation of Assets in Central Payment scenario:

•       Decentral Asset Accounting: Central Payment is only released for those company codes in which no re-activation of assets is necessary after cash discount is taken or no cash discounts are used at all.

•       Asset Accounting runs centrally: No restrictions in regards of re-activation of Assets in Central Payment scenario.

The Central Finance system needs to be configured in a way that at least as many decimal digits are defined for a currency as maintained in the source system. For further details see also SAP Note: 2599964 and 2292043.

 

Innovation in 1809 – Side Panels, Centralized Payments

  • Side Panel displays Central Finance data related to the concerned source transactions in a side screen area of SAP GUI / Business Client.
  • Side Panel for Central Finance can provide Central Finance data for the source user.
  • In Release SAP S/4HANA 1709, FPS2 side panels for FI documents and some master data were delivered.
  • In SAP S/4HANA 1809, SAP SE has enabled MM invoice and SD invoice for Side Panel. When the user displays an MM invoice or an SD invoice in the source system, the replicated FI documents for the relevant of the FI documents of this invoice will be displayed in the Side Panel .

 

Courtesy SAP SE

 

There are other limitations to be assessed e.g. if FI Document splitting is not active in the downstream SAP ERP, then it is not advisable to have the same in CFIN. In these scenarios it might not be possible to move logistics processes into the same S/4HANA system as the CFIN unless the downstream SAP ERP is fully decommissioned.

 

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