SAP Master Data Governance with Central Finance
SAP MDG is especially used for master data management in companies that have lots of GL accounts, customer, vendor and other master data. Managing all this data manually can take a lot of work.
Central Finance also uses different master data from various source systems, and if the required mapping process is carried out manually it can be an inefficient way of getting real-time data. SAP MDG helps avoid this and provides remarkable value for companies which have complex, separate systems.
Central Finance allows integration with Master Data Governance to access available mapping information there. You can map your different accounting entities (for example, account, profit center, or cost center) in your source systems to one common set of master data in the central system, and establish a common central reporting structure.
Treasury and Risk Management on S/4HANA Central Finance
SAP TRM provides the treasury manager with an instant snapshot of cash effects and enables prompt distribution of cash to the strategic areas and different divisions of the company. At the same time, the manager can acquire cash in times of need from the most competent and inexpensive source. TRM is an integrated solution that helps in generating cash and simplifying operations. The integrated treasury and cash management process will provide additional benefits to the company’s finance function, leading to more accurate prediction of cash impact on the company.
Having Treasury and Risk Management on every related system may have some downsides such as being more costly and with the chance of master data conflicts. In contrast, Central Finance offers the possibility to setup TRM on top of a harmonized dataset that is updated in real-time.
All the following TRM applications are available with Central Finance capabilities:
- Transaction Manager (Money Market, Foreign Exchange, Derivatives, Debt Management, Securities, and Commodities)
- Risk Analyzers (Credit, Market, Portfolio)
- Exposure Management
- Hedge Management
Central Payment in S/4HANA Central Finance
Central Payment for SAP Central Finance allows you to make centralized payments and perform centralized clearing activities in the Central Finance system instead of in each source system.
When Central Payment is activated for a specific company code, open-item processing of all customer and vendor accounts for the company code are transported to the Central Finance system. Relevant customer and vendor open items are reproduced in the Central Finance system, so all connected open-item processes for customers and vendors must be moved to Central Finance system.
Benefits of Central Payment;
- Central open item management and reporting.
- Real-time operational reporting with SAP Fiori user experience.
- Standardized payment processes.
- Centralized AP/AR processes like cash application, liquidity planning, credit exposure calculations, and more.
- Reduce costs of bank connections.
- HANA optimization of payment proposal generation.
- Use of SAP Standard interface for uploading bank statements to a central platform.
- Monitoring of bank communications and transactions
Credit Management in S/4HANA Central Finance
SAP Credit Management allows companies to handle risk via real-time credit allocation and monitoring. This allows faster credit decisions, lower transaction costs by automating the credit application and approval processes, reducing DSO through reducing payment delays and bad debt, lowering the rate of incorrect credit refusal, and improvement in relationships by focusing on profitable customers.
The main benefits of Credit Management; Faster, more reliable credit decisions with full documentation and easy audit trail, reduced sales order delays, reduced order suspensions and cancellations to worthy customers, lower costs, reduced demands, and reduced bad debt write-offs.
Local payment and Central Payment processes need to be taken into consideration while deploying Central Credit Management in Central Finance. To enable the update of credit exposure, ALE and web service scenarios must be used. If local payment is used then the clearing status of open items must be sent to the Central Finance system to supply credit exposure information.
Dispute Management in S/4HANA Central Finance
SAP Dispute Management provides functions for processing receivables related to dispute cases. Dispute cases occur in cases of customers deducting from invoiced amounts or withholding payment. The AR Items that are in dispute are marked as such and an object is created against the item.
A dispute case allows the capture of the reason for the disputed item, the information of the personnel following up on the case, and the various stages of communication during the case. When the dispute is resolved, the case is closed with a suitable action.
One of the scenarios of the integration of Dispute Management with Central Finance is through the Central Payment function. Open item processes must take place in the Central Finance system if Central Payment is activated, so the dispute cases can be created from that customer open items. Alternatively, in the local payment scenario, the Central Finance system needs to be connected to the source system to extract the open item information to create the dispute case and update its status.
Collection Management in S/4HANA Central Finance
SAP Collection Management provides collection strategies that allow the selection and prioritization of customers for the collection of receivables. The creation of daily worklists, based on collection strategies, is triggered automatically by the system for collection specialists.
According to the collection strategy, the organization takes advantage of customer prioritization, identification, and evaluation. Daily worklists improve user productivity and efficiency which should realise the income from customers in a shorter time frame.
In terms of Collection Management integration with Central Finance, the same conditions are available as Dispute Management with open items being used for the Collection Management process. With Central Payment activation all open items will be in the Central Finance instance, so there is no need for any additional data integration. When using local payment, then to create collection strategies the Central Finance system will need open items to be provided; this is possible with ALE and web service integration scenarios.
Licenses to use SAP Central Finance:
- Central Finance –separate license
- SAP Landscape Transformation Replication Server – separate license
- SAP MDG attracts a separate license. MDG is not mandatory, but it is highly recommended as manual handling of the mapping of master data can be a lot of work.
Why SAP Recommends S/4HANA Central Finance
Companies prefer simple, agile, and reliable financial tools to make the right decisions at the right time. S/4HANA Central Finance provides these tools and solves challenges when companies have multiple systems, both SAP and Non-SAP.
SAP recommends SAP Central Finance solution for organizations to create value for their business and their partners.
