Central Finance: Enable a Central System for Finance through SAP S/4HANA

Joseph Muroki, Principal, Global Practices, DiSC Execution, Bristlecone

SAP Central Finance is a standard SAP solution delivered for easier, faster, better and cheaper adoption and subsequent operation of a central system for finance. Central Finance enables the replication of financial documents to a centralized finance system in an organization where there are multiple ERP instances or finance applications. It provides a way for businesses to reap the benefits of SAP S/4HANA without a full-blown data migration.

Central Finance Overview

Central Finance comes with a stack of innovative technical SAP components, which together with SAP S/4HANA core functional finance capabilities, form the foundation of a modern financial system. With its standard set of enabling capabilities, Central Finance reduces the need for custom integrations.

  • The data logging functionality is designed to capture and log all the information from source systems that is used for posting in Central Finance. The primary tool in Central Finance for initial loading and ongoing replication is the SAP LT Replication Server. SAP provides standard dataflow architecture that enables real-time integration with SAP sources and near real-time integration with non-SAP ERP source systems.
  • Central Finance provides business mapping based on standard SAP Master Data Governance (SAP MDG) foundational capabilities. Complex mapping requirements can be achieved through custom mapping.
  • For monitoring and error handling capabilities, Central Finance has drilldown and audit trail functionality to relate new documents in Central Finance systems to underlying source documents. To keep Central Finance and source systems in sync, back-posting as a customized option can be achieved through standard SAP integration capabilities like IDoc (ALE) or SAP Process Integration (PI).

SAP Central Finance and Analytics

Central Finance, with its in-memory technology and embedded BW, can integrate with SAP Analytics Cloud and machine learning tools to visualize, plan and predict the likelihood of future outcomes and steer the business in the right direction. Raw data from source systems can be augmented, enriched and digitized before posting into Central Finance for digital enterprise reporting and process execution. Central Finance postings into the central universal journal create a complete set of financial records (a single version of truth) on a platform that enables next-generation automation and shared services. Powerful analytics capabilities embedded in Central Finance provide complete flexibility to conduct analysis.

SAP Central Finance and Group Reporting

Central Finance provides capability for multi-entity reporting regardless of the source system. It delivers financial information in a standardized reporting format, giving the ability to easily compare and evaluate performance (benchmarking) across the organization. It also provides the ability to combine financial data from subsidiaries or business entities within an organization for consolidated reporting. Financial information in Central Finance is stored on a transactional line-item level with full, unabbreviated dimensionality, giving capability to drill down from any higher level to the transactional level, or vice versa.

Central Payments and Cash Application

Central Finance can be used to make payments centrally for all vendor activity that exists in underlying ERP systems. As an open item is replicated in Central Finance to be processed there, it is automatically marked as cleared in the source system. All follow-up steps (e.g., payments, bank reconciliation, reporting) are then performed in Central Finance. Additional machine learning applications like SAP Cash Application can be installed on top of the central system. Cash Application is a good example of how SAP S/4HANA and Central Finance can automate manually intensive processes through machine learning. The Cash Application is a natural place to start and is highly complementary with central cash, treasury, credit collections and disputes – as part of an integrated payment factory strategy with Central Finance.

SAP Treasury and Central Finance

Working capital improves through proactive management of cash, collections and receivables, as well as improvements in functionalities, including credit checks and central credit blocks for sales processes. As the Central Finance environment evolves, free cashflow is accelerated and the need for short-term financing is reduced. When SAP Treasury is deployed with Central Finance, data already residing in the universal journal increases accuracy in cash forecasting, predictive inflows and outflows directly from AR and AP, optimization of discounts, reduction of reserves, and proactive management of financial risk.


Central Finance expands the finance department’s ability to serve as a true business partner through flexibility and innovation. Planning and forecasting, integration of disparate systems for reporting, elimination of batch processing, improvement of closing activities, and real-time access to profitability data are greatly enhanced in Central Finance. Predictive analytics and machine learning are embedded into processes, and enterprise risk is monitored and mitigated in real time. Central Finance is the innovation platform enabling finance departments to lead companies to growth, gain deep insights into profitability, and simplify and automate processes to create a truly intelligent enterprise.

Interested in taking a deeper dive? Download this white paper:
SAP S/4HANA Central Finance: A Complete Understanding