SAP S4 HANA Finance, also known as SAP Simple Finance is the new generation Finance module on the HANA Platform. It is one of the most important modules of the SAP Business Suite. It majorly has two Parts. One is related to Finance and the other is related to Controlling.
What all is covered in this Article:-
Let us begin learning about this very important subject.
As mentioned above, SAP S4 HANA Finance has two aspects i.e. Finance and Controlling. Here I mention in brief the most important sub-modules of these aspects.
Please note, Controlling is now part of SAP S4 HANA Finance itself. It is also called SAP S/4HANA Management Accounting. In SAP FICO CO was a separate module from FI. However, in S/4HANA, Controlling’s key topics are now merged with SAP Finance.
(All these topics are separately covered in detail in Skillstek’s blog. This will help you to give in-depth knowledge on each topic.)
Do you want to read:- SAP Controlling in ECC and its sub-modules
HANA is not only a Database, but it is also an Appliance, which means it is a combination of Hardware & Software innovation.
With S4 HANA Simple Finance, SAP has replaced the traditional Disk-based Database with In-memory Database, which has Multi-Core processing with many blades. Likewise, it has replaced Software innovations like Row-based Tables with Columnar tables. Consequently, you no more require separate Index Tables, Aggregate Table etc.
Related: Key Features of SAP S/4HANA Finance
While learning S/4HANA Finance, you will understand that you don’t need to maintain the OLTP & OLAP system separately. Since the HANA Appliance is a combination of both OLTP & OLAP systems together. Hence, you can get HANA Reports on the fly.
S4 HANA Finance has introduced a Table ACDOCA (Universal Journal) which has replaced lots of Tables from the existing ERP (ECC). This includes Finance, Controlling, Asset Accounting, COPA etc.
Furthermore, it has all transaction line Items of FI ( BSEG), CO (COEP), CO Object External Posting (COSP), and Secondary Cost Element (COSS). Additionally, it has Open Items like BSID & BSIK and Clear Items like (BSAD & BSAK).
Related: List of important tables in SAP
In S4 HANA Finance Ledgers combines the latest Leading Ledger and Non-Leading Ledger. Additionally, it has launched new features like Extension (Appendix) Ledger & more in its portfolio.
With SAP Central Finance, you can run SAP S4 HANA Finance in a shared service model. It mainly centralises all transactions into a consolidated instance.
SAP S4 HANA Finance adopts SAP Fiori design to deliver a beautiful and user-friendly finance application for the best consumer experience.
SAP Simple Finance provides the following advantages:
| Key Performance Indicator | SAP S/4 HANA Simple Finance Functionality |
|---|---|
| – Universal Journal’s virtual single-operating model – Seamless FI-CO Integration – Real-time data across all financial dimensions. | – Extended simulation flexibility and speed – On-the-fly calculation capabilities – Better business advice with more relevant and timely insight |
| It makes enterprise cost reductions possible. | – Improved automation capabilities in nearly all areas – Real-time insight into global sources – Uses of cash – Elimination of batch jobs |
| SAP S4 HANA Finance helps better Measure and monitor business performance. | – Consistent business insight and prediction capabilities – Elements discovery across all FI value map – Visualization tools to easily understand your data |
| It optimizes the planning, budgeting and forecasting process. | – SAP BPC for SAP S4 HANA Finance – Deployment options-on premise cloud – Hybrid-integrate planning – Consolidation functionality in real-time |
| It executes continuous finance process improvements. | – Financial close, planning, forecasting and budgeting process – Streamline communication with banks – Automate payment workflows – Integrate collaborative finance operations – Fraud and audit management. |
| SAP S4 HANA Finance provide inputs to enterprise strategy. | – Extended simulation flexibility and speed – On the fly calculation capabilities – Better business advice with more relevant and timely insight |
| It helps develop talent in the finance organization. | – Use of modern UX and SAP Fiori apps – Improved automation capabilities to get rid of transactional activities – Free up resources for value-added tasks |
Read Related: Simplifications in SAP S/4HANA Finance
To illustrate the business value of SAP Simple Finance, I have put various business scenarios which would help you understand the functionalities more precisely.
SAP S/4HANA Finance’s Central Finance deployment option addresses the challenge of multiple SAP ERP systems. An example of this is the complexity of mergers and acquisitions. Likewise, SAP S/4 HANA Finance’s month-end close business scenario addresses the current long closing cycles. Additionally, it accomplishes the desire to have reliable financial data at any time.
SAP S/4 HANA Finance’s working capital and receivables management business scenario addresses the organisation’s pain points. This includes the high days of sales outstanding and cash flow challenges.
The process oversight functions of SAP S4 HANA Finance help to identify the areas with high-risk fraud. Thus, it makes the system more secure.
SAP BPC for SAP S/4 HANA Finance addresses the need for dynamic planning and ambition for enterprise-wide integrated planning at the same level. Consequently, it simplifies the planning and analysis process and integrates control at the central level.
Universal Journal in SAP S/4HANA is the single source of truth for financial information. It carries a new data model that combines Controlling (CO), and SAP ERP Financials (FI). It further has Asset Accounting (AA), SAP Material Ledger (ML), Profitability Analysis (CO-PA), and other financial data in one Universal Journal entry. Furthermore, these all are represented in the table ACDOCA, with full details for all components. Since the system provides all data in real-time from this single journal. Thus, it reduces the period-end reconciliations and financial reporting preparation efforts considerably.
The new Universal Journal allows ad hoc, on-the-fly computations for converting recurring transactions from batch to real-time. It does not need the data to be replicated first to other systems such as SAP Business Objects Business Intelligence (SAP Business Objects BI). Further, the reporting is simple, fast, and multi-dimensional. Hence it makes the drill-down reports almost redundant.
The ability to move away from batch-based and towards event-based processing enables period-end processes to run daily or weekly. Thus, it allows organisations to get a real-time view of their profit and loss (P&L). Even more, it provides the business with early visibility into emerging trends.
This functionality facilitates prompt remedial action where necessary, rather than waiting till the month-end. Consequently, it helps accelerate month-end activities by reducing dependency on scheduled and periodic batch jobs and tedious reconciliation efforts.
This is a new planning functionality in which you can upload planning data using Microsoft Excel, which in turn loads real-time data back to SAP ERP for reporting. It also contains templates for internal orders, projects, profit center, cost of sales, P&L planning and also for SAP cost centers.
New Asset Accounting in SAP S/4HANA Finance replaces the classic FI-AA functionality. It also simplifies posting logic which in turn allows seamless integration with the Universal Journal. Due to the real-time postings, we don’t need to wait for the month-end depreciation run.
S/4HANA Finance allows an optional replacement for SAP Cash and Liquidity Management. This also adds bank account management, short-term cash position and forecast reports. furthermore, it enables real-time liquidity planning which allows for working capital optimisation.
Likewise, SAP Cash Management provides on-the-fly reporting capabilities for cash position and liquidity forecasts.
We already know that Fiori enables the best user experience and friendlier usage of the finance application. These are optional replacements for many of SAP’s traditional drill-down reports. While the code framework used by the old reports can’t be accelerated much with SAP HANA. SAP Smart Financials reporting uses the SAP Smart Business mobile UI with online KPIs and essential financial information.
This not only saves time but also enhances the performance of the finance application.
This technical change replaces SAP data archiving. The new method builds data-ageing objects, creates partitions, and executes data-ageing runs. Thus, it reduces the SAP HANA memory footprint. Noteworthy, while only operational relevant data (hot data) is loaded in the main memory, historical data (cold data) is stored on a disk.
Now the classic G/L functionality is completely replaced by the SAP New General Ledger. The classic G/L is only supported before the introduction of SAP S/4HANA Finance.
SAP Credit Management is now completely covered under collaborative finance operations and receivables management.
SAP S/4HANA Finance’s Architecture lies with Universal Journal, which is comprised of a single source of truth for all accounting components. Hence, it makes reconciliation a topic of the past.
The new architecture consists of the following elements:
Universal Journal provides us with One single source for data in FI. It offers it in the form of a line-item table ACDOCA with full details for all components.
The following are some of the Universal Journal features:
Secondary cost elements are created and depicted as G/L accounts with the following activities:
Now reporting is based on a single source of truth (e.g., replacement of SAP Business Objects BI reporting). Certainly, it allows fast multidimensional reporting on the Universal Journal. This is possible without replicating data to a separate system.
This simplification process does the following:
S4 HANA has reduced the memory footprint by eliminating redundancy.
Technical preparations have enhanced important structural capabilities of the financial solution (e.g., multi-GAAP, additional currencies, etc.).
When you activate the SAP S/4HANA Finance, the system replaces aggregate tables of classic FI-AA with SAP HANA views.
Following are the tables:
Learn: Scenarios in SAP General Ledger Accounting
Implementation of SAP S/4HANA Finance is undoubtedly a significant strategic decision both for IT and the business. You may use several SAP S4 HANA Finance deployment scenarios based on the situation and the requirements of the organization.
This scenario features a fresh implementation of business processes on the SAP S/4HANA platform. Maybe because it is a new implementation. Otherwise, the reason could be that migrating the existing implementation to SAP S/4HANA provides little benefit.
For any greenfield SAP implementation, brand-new customers might take the view since they’re already implementing SAP. Hence, they should go and get a completely new SAP S/4HANA. However, you need to carefully analyze the organization’s specific financial requirements also. This is to determine the components of SAP S/4HANA Finance that require activation. This also includes assessing nonfunctional requirements too.
Likewise, you need to expect pre-migration validation checks and data fixes that require patience and persistence.
During the SAP HANA database migration, an organization is already on SAP ERP 6.0 EHP 7 or above (on a traditional RDBMS). Organizations on mature SAP ERP 6.0 implementations can analyze the impact of what a real-time analytical environment may bring them. Also, to know how they can monetize the value of real-time information which is fast available. Consequently, they can create good value for their organizations.
Technically, this commits the organization to SAP’s proprietary in-memory platform. Organizations need to spend time assessing the business case. This includes the risk of adopting the SAP HANA platform versus running the SAP Business Suite on other platforms, particularly in industries that use many other connected applications.
Related: What is SAP?- Learn in detail
This scenario replicates all systems, both SAP and non-SAP, into a Central Finance instance before deploying SAP S/4HANA Finance into the company’s environment.
Some organizations are either not yet ready to upgrade their legacy systems or such an upgrade will be complex and time-consuming. Here SAP Central Finance benefits would help. Those organizations should go for the Central Finance deployment option. This is also because the C-Fin system architecture is such that it will support their requirements.
So, in this way, they can get benefit from SAP S/4HANA Finance without touching the existing system landscape. In short, by using Central Journal facilities, they can connect legacy SAP and non-SAP systems to an environment based on SAP S/4HANA Finance.
Also read: How to get a job in SAP FICO
SAP S4 HANA Finance is an interesting subject, also very important. Especially for SAP End-users of SAP finance and for SAP FICO consultants. Since they might want to upgrade their profile with S/4HANA.
S/4 HANA is the future. The features and benefits of S/4HANA Finance are enormous. As you dig into the subject you would find amazing facts that why this subject is the most popular module in SAP. For this very reason, it is in high demand. So, if you have an interest in this field of career, step ahead soon and explore more with the SAP HANA Finance course.
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