Financial managers are in high demand. Their services include determining where capital funds should be expended to meet short- and long-term goals and how to pay for them, such as by taking on debt or selling equity.
This session will explore how SAP finance enables a future where FP&A can rely on a single source of truth, flexibly provide analytics, and automate processes to drive efficiencies.
Automation
SAP finance refers to the financial management and accounting modules within the SAP (Systems, Applications, and Products in Data Processing) software suite. SAP is an ERP system that integrates business processes to manage operations. Within SAP, the Finance modules are crucial in handling financial transactions, reporting, and analysis.
Using automation, finance teams can free up time to focus on high-value activities. Several finance processes can benefit from automation, including treasury management, accounting, invoice processing, and data migration. Automating these tasks allows teams to process more work in less time, improve accuracy, and enhance the customer experience.
A critical financial management function is strategic planning and forecasting business operations based on historical performance data. This process typically happens annually or semi-annually and requires a team of finance professionals to set goals for the next year or six months. Then, they must develop a strategy to achieve those goals by creating and sharing a plan of action with other finance teams.
Another finance function that can benefit from automation is expense management. Automating procurement processes, payment reconciliation, and spending can save time and money by allowing finance teams to see exactly where their dollars are being spent. Additionally, automating the ability to run consistent reports for in-depth analysis can help finance teams make more informed decisions with real-time data.
Many companies need help keeping pace with regulatory compliance, taxes, and international trade changes. SAP’s solution is to integrate these functions into operational processes, making it easy for finance and accounting teams to track and manage changes accordingly. This is where innovations like flexible master data transfer to SAP global trade services, traceable manual adjustment for withholding tax items, and registration for indirect taxation abroad come into play.
Integration
Financial management processes must work together to deliver new business models, optimize operating capital, reduce risk, and mitigate economic disruption. Intelligent technologies like AI, ML, blockchain, and data science are built into financial management solutions to automate tasks, provide analytics, and improve forecasting accuracy.
Accounting and financial close are streamlined with a single source of truth, reduced reporting and reconciliation cycles, and increased transparency to make faster decisions. Revenue and cash flow are improved with a unified ledger, simplified invoicing and billing, and automated payments. The finance department is also able to manage risk and compliance more effectively.
Global presence and multiple mergers, acquisitions, partnerships, or divisions can lead to complex management and financial consolidation processes. Manual consolidation is time-consuming, prone to errors, and can result in duplicate data. SAP solutions provide automation and a single source of truth while considering different entities, companies, currencies, legal standards like IFRS and GAAP, and IT systems.
Planning and analysis are streamlined with a unified ledger, real-time master data with accruals, and multi-dimensional data modeling. With this, planners can model scenarios and focus on insights while reducing the admin burden. Furthermore, the solution can provide speed and agility by linking planning with material management, allowing sales planning at the customer or product level, and integrating with workflows and sourcing.
Analytics
The finance team analyzes business data to predict future outcomes and help set company goals. It includes forecasting operational budgets and projecting financial performance to identify areas for improvement. It also helps monitor production timelines and reduce production delays, which can be a significant cost to the business in terms of lost revenue and wasted resources.
Finance teams also work with marketing and sales to set prices for the company’s products or services. They must balance keeping prices low enough to attract customers and high enough to cover expenses and turn a profit. Finance teams are also responsible for identifying ways to cut costs, whether through lower-cost raw materials or finding ways to save on electricity or shipping costs.
One of the primary goals of financial management is to maximize profits, which is achieved when the marginal cost equals the marginal revenue. Another goal is increasing stakeholder wealth, which can be accomplished through a well-planned investment plan. Financial managers must be able to assess and evaluate market risks, such as changes in interest rates or currency fluctuations, and incorporate these into their investment decisions.
The demand for financial managers is expected to increase due to the globalization of businesses and changing regulations. Those willing to embrace change and utilize the latest innovations in financial management will be best prepared for future success.
Cloud
Ensuring financial processes can respond is essential in a world where compliance and international trade are rapidly evolving. This is where innovations like flexible master data transfer to SAP global trade services on the trade side and indirect tax-specific control with financial compliance management on the finance side come into play.
One of the critical innovations in financial management is the unified platform where disparate SAP ERP systems can be connected to create a single source of truth for the entire business. It allows for more intelligent automation, reduced admin tasks, and a central cockpit of up-to-date information for making decisions. This is a significant advantage when it comes to improving DSO and the overall efficiency of the finance department.
Various major yearly SAP finance solution releases have continued to build on this innovation. Recent enhancements include predictive accounting, consolidation with group reporting, the Universal Journal, and a more efficient hard financial close.
In addition to these core finance features, there are dedicated cloud applications for areas like credit management and cash and treasury management. For example, the recently released GROW with SAP application delivers an integrated suite of services to modernize the entire finance process. It includes a central cockpit of up-to-date information and intelligent automation for everything from payables to receivables and expenses to tax compliance.
