Introduction
Central Finance (FI-CF) is an S/4 HANA system that facilitates connections to non-S/4 ERP systems and replicates transactional postings from these source systems. As of version on premise 1709, only finance postings at the General Ledger level completely replicate and some limited functionality is added for Accounts Payable and Accounts Receivables processes. Central Finance System (CFS) provides new Business Use Cases and is aimed at a framework to standardize and rationalize financial posting logic at the Central system.
First introduced in SAP S/4 1503 on-premise edition, Central Finance has undergone significant changes over the past two years. As of on-premise 1709, Central Finance is further enhanced to support Central Payment, Central Tax Reporting, and 3rd party system process integration.
Is CF a Standalone System?
No. CFS is not a standalone system. CFS solution is part of the finance suite with a separate license within the SAP S/4HANA system. By default, CFS is not activated and business function FINS_CFIN activation enables this functionality and provides necessary configuration, process, and error-handling nodes in the S/4HANA system.
It is a complete S/4HANA system that includes logistics components such as MM, SD, PP, and so on, along with Finance modules – GL, AP, AR, Asset and Controlling modules – CCA, PS, and Profitability Analysis.
Landscape Scenarios for S/4HANA with Central Finance (FI-CF)
Almost every customer system landscape and business process requirements would be unique and result in many combinations of options to consider for S/4HANA with CFS.
Common landscape scenarios:
- Only enable CFS in the S/4HANA system and integrate all legacy systems
- Implement S/4HANA with logistics and finance for one location and integrate all other ERP systems to CFS
- Implement all legacy SAP systems in S/4HANA and non-SAP systems replication to CFS
- Implement MDG for master data mapping for CFS and implement replication with legacy
Consolidate only related company codes and replicate Finance for standardized reporting and harmonized data.
As CFS provides a non-disruptive way of experiencing new innovations in an in-memory HANA® based system, roadmap assessment projects should consider CFS as part of their S/4HANA migration strategy.
Business Process in Central Finance (FI-CF) System
- Data Mapping – it is initial mapping as well as ongoing mapping of master data finance objects such as GL Accounts, Cost Centers, and Profit Centers with legacy transactional systems
- MDG Data Mapping – if CFS is implemented along with the MDG landscape, mapping is performed as part of the MDG tool and reflected in CFS through a standard interface
- Maintain Master Data – The CF system needs all master data elements to be created and provide the information for mapping
- Error Handling – The SAP Application Interface Framework(AIF) component is used for analyzing replication errors. Correcting errors reprocessing errors and deleting error lines are some common business processes
- Deletion of Replication Documents – CFS provides tools to delete documents that are replicated from the FI-CF system. Deleting a single document or a set of documents is possible
- Reconciliation – Financial postings from different systems need to be reconciled regularly with appropriate checks to make CF system for system records for Financials
- Comparison Reports – CFS provides specific reports to compare journal header line item reports of GL accounts and they can be used for reconciling the central system with feeder systems
- Central Finance: Comparison of FI Document Headers
- Central Finance: Comparison of FI Balances
- Central Finance: Comparison of FI Line Items
- Central Finance: Comparison of CO Document Headers
- Central Finance: Comparison of CO Balances
- Central Finance: Comparison of CO Line Items
- Initial Load – Initial Load is a complex and critical process. This is a one-time process but would be an ongoing process as new locations are rolled into the replication landscape
- Open Item Replication – from the latest versions of S/4HANA, open items from the source system are replicated with open, cleared status. This enables S/4HANA to handle Central Payments
- Cross Company Code and Document Splitting – If document splitting is activated in CFS then all company codes which are part of splitting need to be transferred. Line item reports have to be run for cross-company code reconciliation
- Handling of Reversal of documents in SAP – not all documents in CFS can be reversed. Special steps need to be followed in reversals
- Central Tax Reporting – from the 1709 version onwards, tax reporting can be performed from CFS. Sales tax calculations are still not possible for source system sales and purchases. However, GL line items carry tax information for reporting purposes. This reporting is still evolving as of 1709 and a lot of restrictions apply
- Central Payments – from the 1709 version Central Payment system is enabled and open items can be applied in the Central System. This brings considerable value. As of this article’s publication, a lot of restrictions still exist and need careful consideration to make productive use
- Single Euro Payment Area (SEPA) also can be implemented as part of payments
Limitations of Central Finance (FI-CF) System (Missing Functions)
- Fixed Assets - Fixed Assets lines in the source system are not replicated into Fixed Assets in CFS. Asset and Depreciation journals in the source system do replicate in CFS but as General Ledger entries only
- Special Purpose Ledger – If the source system has SPL as part of its process landscape and has special ledger reporting, these postings are not replicated in CFS. Special process requirements need to be assessed to achieve these specific requirements
- CO-PCA – if CO-PCA is implemented in the source system and if there are internal postings for stock movements in profit center valuation, they are not replicated in the CFS system
- Sales Orders as Cost Objects - If source system line items are posted with Sales Orders (generally in CO-PA with Make to Order scenario), Sales Orders are not replicated into CFS. A unique set of Internal Orders may be mapped to this scenario
- Settlement Rules – Settlement rules in the source system are not replicated in CFS
- Accounts Payable – Open Items replication from the source system to CFS needs SAP notes to be implemented
- Accounts Receivable – Open Items replication from the source system to CFS needs SAP notes to be implemented
- Tax Reporting – Even though tax reporting is available as of premise 1709, many restrictions exist and this process can not be used for productive purposes as of now
- Document Reversals – Some restrictions apply for reversing the documents in a central system
- Profitability Analysis(COPA) – Profitability Analysis implementation in Central Finance is based completely on a different model than the previous version of S/4. Account-based CO-PA is the new preferred version and all line items are posted in the universal journal. Source system Costing based CO line items are not replicated into the Central Finance System
- Functional Area – Functional Area derivation is not supported in the CFS system
- Special GL transactions – Transactions such as down payments, bills of payment, and noted items are not replicated in the Central System
- Parking Documents – Documents parked in the source system are not replicated in Central System
FI-CF system is an innovation from SAP to support the non-disruptive adoption of S/4HANA. Since its inception, CFS has gone through rapid changes to accommodate different requirements from customers. It is expected, that all limitations will be crossed to make CFS the standard model for harmonization and standardization.
This blog post is part of GyanSys Solutions Lab's weekly series titled SAP S/4 1709 Simplification Digest. Contact us to learn more about changes in SAP S/4 1709 and how it impacts your organization.
