SAP Central Finance – Business Processes Design view with implementation of Central Payment
With SAP Central Payment, we already know there will be lot of process changes will come in an organization and it is important to understand what that change means in terms of process, people, technology and most important the impact on customer (it may be indirect too). In this blog I intend to explain an summarise the changes which Central Payments bring in business processes which will then needs to be boiled out to further impact analysis and I will share the framework for the analysis.
This is more of a business & strategic steps rather just a technical step. But once activated Central Payment brings in lot of changes which we will discuss now and will also assess next steps within the framework.
Before we go to the assessment, let us understand in a simple pictorial way as how a process that was managed in a single ERP system will be split into more than ONE. Mainly the two core processes are impacted and on top of these processes, the reporting is impacted:
- Order to Cash (OtC or O2C)
- Procure to Pay (PtP or P2P)
Order to Cash
Key watch areas:
- Credit Check will be Centralised which adds benefits but at the Same time it adds risk as if there is a technical failure in connecting the two systems the credit check is not happening then Sales Order Processing will be impacted and which may result in commercial business impact as well as customer impact.
- Both systems needs to run hand in hand for end to end business process until SAP ECC is sunset as a part of long term transformation strategy
Centralised FSCM will also help in reducing the overheads as it simplifies the structure and processes from multiple ERPs to One ERP
Now let us have a view of
Procure to Pay or Source to Pay
Key Watch Areas:
If any satellite is connected like Ariba or Zycus for Vendor/Contract management, that still needs to be continued with SAP ECC. In addition, until Accounting View of Logistics Information is implemented the information related to PO etc. will not be even visible in SAP Central Finance. To rerad more on AVL – CLICK HERE
That gives a clear picture how the process is split and it is really complex to manage process in different system rather running in same system. However, that complexity can be reduced if we implement Cross System Process Control (CSPC) in SAP Central Finance scenario. Read here what it is all about.
Now do not just assume or consider it as a complexity rather it comes with lot of benefits like:
- Central open item management and reporting
- Cross-system view of customer and vendor accounts
- Real-time operational reporting with Fiori user experience
- Centralized process know-how in shared service centre & Standardize payment processes
- Centralized A/R processes like cash application, credit exposure calculations & dunning
- Reduction in bank connectivity and hence cost reduction
- HANA optimization of payment proposal generation
- Integration of Digital Payments
With implementation of Central Payment, some other dependent processes also change or get impacted. Read here in detail – PART – 1 & PART – 2
- Document changes
- Tax Management
- Value Added Tax (VAT)
- Deferred Tax
- Withholding Tax
- Down Payment processes
- Condition based
- Request based
- ALE IDOC Scenarios
- Asset Accounting
- Cash & Liquidity Management
- Bank Account Management
- Credit Management
- Dispute Management
- Collections Management
- Balance Carry forward
This analysis opens up the discussion for the overall transformation strategy and bring the below questions:
- Is this the interim state of the end state of transformation?
- If it is interim, how long this can be managed/continued?
- How will business benefit be quantified with this approach?
- How the end state looks like and what will be the cost benefit analysis?
- What will be the end state – Full blown SAP S/4HANA or a mix of Non-SAP systems as well?
- What will be impact on people and processes?
- What amount of change management is needed?
- What are the next steps to move?
- What will be the cost of change as well as ongoing cost?
The moment Central Payment is implemented it opens up a big bubble and demand for more futuristic vision is needed. This should not be just considered a technology change rather a business process and finance transformation which will then result in enterprise wide transformation.
Key SAP notes –
- 2827364 – Central Payment Consulting Note
- 2727394 – Handling of Historical Open Items
- 2346233 – Central Payment for SAP Central Finance: Pilot Note for Activation of Central Payment
- 2292043 – Central Finance: Enable Clearing Transfer in Source System
- 2623514 – Central Finance and Withholding Tax – SAP Notes
- 2509047 – Central Finance: Required SAP Notes to support Tax Reporting
- 2474760 – Central Payment: SD Down Payments
- 2683870 – Central Payment: MM Down Payments
Happy reading and plan well before you activate Central Payment.
also recomended to read:
SAP Central Payment – Central Tax Reporting
SAP Central Payment & SEPA Mandates