Navigating Financial Consolidation Challenges with SAP Group Reporting
Financial consolidation is a fundamental process for every company, involving the regular aggregation and consolidation of financial data from multiple entities within a corporate group. In almost any large-scale SAP S/4HANA transformation program, challenges arise when consolidating data from several different sources.
One reason for these challenges to occur is that, in some cases, not all entities may have transitioned to SAP S/4HANA at the time of consolidation. And often even in the end state, financial data from multiple sources must often be integrated because not all entities are performing on the same ERP system.
These different source systems usually have complex mappings that do not integrate smoothly, causing Finance teams to face time-consuming consolidation cycles, data-entry errors and potentially inaccurate or delayed reporting. As a result, compliance and auditing processes become more complex and time-consuming due to the manual effort required —ultimately undermining confidence in financial results and hindering critical strategic decision-making.
To address such consolidation challenges, it is essential to have a system capable of supporting multi-source financial consolidation. In today’s environment, organizations face growing pressure to comply with evolving regulations, adapt to the phase-out of legacy ERPs, and deliver real-time insights—making automated and unified group reporting more critical than ever. To tackle these challenges, financial data from SAP S/4HANA, SAP ECC, and non-SAP systems must be integrated with a high level of automation. Therefore, when possible, it is recommended to implement SAP’s Group Reporting as early as possible in the SAP S/4HANA roadmap.
Since 2018, Group Reporting serves as SAP’s solution for financial consolidation, succeeding its predecessor, BPC (Business Planning and Consolidation), and other earlier solutions. Today, Group Reporting is an integral component of SAP S/4HANA, and it is a solution that any organization transitioning to SAP S/4HANA should consider. It can be deployed both on-premises and in the cloud.
This blog will explain the core concepts of SAP Group Reporting and how Deloitte utilizes these to enhance the consolidation cycle for clients.
Importing Data into Group Reporting
Functionality at a Glance
Group Reporting provides users with several easy-to-use methods for importing data into the system. To begin with, there is seamless integration between the financial accounting data in SAP S/4HANA and the consolidation data in Group Reporting. The financial accounting data in SAP S/4HANA can be transferred to Group Reporting with just the click of a button. Since both datasets operate on the same platform, SAP completes this process in just a few seconds. A prerequisite for smooth data transfer is the identification and maintenance of the mapping between general ledger accounts and financial statement items.
Our approach with clients
In close collaboration with our clients, we determine whether to establish a 1:1 relationship between GL accounts and FS items, or prefer a 1:N relationship. Generally, we observe the benefits of maintaining a 1:1 relationship between the two. The primary advantage is the uniformity of data between SAP S/4HANA and Group Reporting. If an unexpected entry occurs, it is very easy to drill down and trace back to the initial transaction that caused the discrepancy. We achieve the integration of financial data from companies that are not yet live on our SAP S/4HANA system using user-friendly upload templates. These templates are distributed and maintained locally. Once filled with the necessary data, the files are uploaded into the system.
Intercompany Matching Simplified
Functionality at a Glance
To optimize the closing and reconciliation process at the end of financial periods, we utilize the Intercompany Matching and Reconciliation (ICMR) tool offered by SAP S/4HANA. This tool enables us to define matching methods so that the system can identify corresponding line items. A straightforward example is an intercompany receivable item in Company A that should match with the intercompany payable item in Company B.
Our approach with clients
The tool allows the financial department of our clients to continuously monitor, match, and reconcile intercompany transactions between entities. The ICMR dashboards provide users with insights into which intercompany relationships have yet to be reconciled. This enables the financial department to address discrepancies during the financial period rather than waiting until the hectic period-end closing days.
Safeguarding Data Quality in Group Reporting
Functionality at a Glance
In preparation for the automatic eliminations to be performed during the consolidation cycle, it is crucial to ensure that the data is complete and accurate. Group Reporting includes a predefined set of validations that can be utilized where applicable.
Our approach with clients
To work with accurate and high-quality data during the consolidation cycle, we employ validation rules in financial accounting and Group Reporting. In financial accounting, we apply validation rules to ensure that trading partners are recorded in all intercompany transactions, which prepares them for automated consolidation in Group Reporting without the need for manual intervention. Additionally, we leverage the predefined validation checks in Group Reporting to ensure our data is complete, accurate, and balanced. Examples of these checks include verifying a balanced profit and loss statement and ensuring equal values between assets on one side and liabilities and equity on the other.
Automating Intercompany Eliminations
Functionality at a Glance
The goal of financial consolidation is to achieve a unified, group-wide overview. Therefore, the elimination of transactions between companies within the group is a crucial step in the consolidation process. A common example of this is intercompany payables and receivables. Group Reporting allows us to set up our own elimination steps according to specific financial structures. In these steps, we define which data needs to be eliminated and how the elimination postings should be executed.
Our approach with clients
Together with the consolidation teams at our clients, we dedicate significant time to thoroughly understand all the necessary elimination steps. As a result, we automate these steps using the elimination capabilities of Group Reporting. Intercompany elimination steps, such as those for sales, expenses, interest, dividends, and zero-balancing accounts, are fully automated by providing Group Reporting with the correct data selection and logic. Additionally, eliminations required for minority interests and subsidiaries’ results are executed with the push of a button. During the last quarterly close at one of our clients, Swinkels, more than 220,000 elimination lines are posted automatically. The time saved enables the consolidation team to focus on exceptions and decision-making rather than data processing.
Closing the Loop: Reporting and Analysis
Functionality at a Glance
Group Reporting includes standard reporting applications that provide users with a series of Fiori apps to view their consolidated data. Similar to other reporting apps in SAP S/4HANA, it is possible to add hierarchies, such as the group structure, apply filters, and drill down to specific entries. Group Reporting also offers integration options with SAP Analytics Cloud (SAC) and Analysis for Office.
Our approach with clients
This varies per client, but we see significant added value in the Analysis for Office functionality. This approach provides users with real-time access to the CDS views included in the standard Group Reporting functionality. The combination of this live access and the reporting capabilities in Microsoft Excel creates a dynamic and user-friendly reporting tool, facilitating the completion of the financial consolidation process.
Together with Deloitte: Transforming Financial Consolidation Processes
Many organizations have already realized tangible benefits from implementing SAP’s solution for Group Reporting together with Deloitte. Deloitte’s approach leverages Group Reporting to fully integrate and automate the consolidation process, enabling real-time reconciliation of intercompany transactions and robust data validation—with the goal of reducing manual effort, shortening closing cycles, and increasing transparency.
Together with Swinkels, significant results were achieved. As their Financial Consolidation Manager explains: “We truly make strides in the process of financial consolidation. A major advantage of SAP Group Reporting is that the entire consolidation process now occurs via two apps in a user-friendly environment. As all consolidation tasks are fully integrated into SAP Group Reporting, this enhances quality and makes the consolidation process more efficient.”
Would you like to learn more about SAP Group Reporting and how it could benefit your organization? Please do not hesitate to reach out to discuss potential opportunities for enhancing your financial consolidation processes. We look forward to connecting with you!