Why Governments should re-consider centralising finance systems

Governments should re-consider efforts to centralise finance systems

Across many governments, finance systems have grown in silos—each agency managing its own tools, data, and processes. While this may have worked in the past, it now poses a significant challenge for governments trying to deliver coordinated, efficient, and transparent public services. Centralising finance systems isn’t just about consolidation—it’s about creating a stronger foundation for better decisions, stronger control, and smarter spending.

Before diving into the benefits and steps of system integration, it’s helpful to understand how the OECD frames different financial management information system (FMIS) models:

• The Centralised FMIS model, in which entities within government are granted access to an FMIS operated by the Ministry of Finance or another central agency, applying common standards, definitions and functionalities.

• The Partially decentralised FMIS (or "partially centralised FMIS") model, in which i) certain entities within government are granted access to a centralised FMIS while others are operating a separate FMIS; or ii) only some core financial management functions are managed in a centralised FMIS, while others are managed by entities within government in their own IT systems.

• The Decentralised FMIS model, in which entities within government are allowed to develop and operate their own FMIS systems, possibly subject to some central government requirements and standards.

This article focuses on the centralised model—why it matters and how to effectively integrate agency finance systems into a unified, future-ready platform.

1. Why centralise finance systems?

Centralisation provides a single source of truth. When finance data is spread across agencies, it becomes difficult to get a full picture of the government’s financial position. This fragmentation delays decision-making, obscures inefficiencies, and increases the risk of mismanagement.

A centralised system allows decision makers to:

• Access consistent and real-time data

• Improve cash management and reduce borrowing costs

• Strengthen internal controls and reduce duplication

• Align budgets with national priorities more easily

With centralisation, finance leaders can shift their focus from reconciling disconnected spreadsheets to steering public resources towards better outcomes.

2. Integrated financial management across government

A modern centralised system integrates financial data and workflows across all agencies and levels of government. This doesn’t mean losing the specific needs of individual departments—instead, it allows their unique processes to feed into a coherent whole.

Integration also spans beyond core finance functions. Human resources, payroll, procurement, debt management, and revenue collection all need to connect to the central platform. This linkage supports better forecasting, more accurate reporting, and coordinated reform across public service systems.

3. Real-time decision support

In a fast-moving world, governments need systems that reflect today’s realities—not last month’s. Real-time integration makes it possible to see the current financial position, monitor actuals versus budget, and identify problems early.

Central platforms should support digital transactions, automated reconciliations, and interactive dashboards. Whether it’s checking the cash flow, analysing agency spending, or tracking programme delivery, decision makers need access to timely, reliable information.

4. Building a modern platform with interoperable components

Rather than trying to build a single massive system, governments should develop a modular platform that can grow and evolve. This involves using interoperable digital components connected through standard APIs and shared data formats.

This approach reduces vendor lock-in, allows flexibility in system upgrades, and supports integration of best-in-class tools over time. Agencies can keep specialised systems where needed, provided they can exchange data with the central platform securely and consistently.

5. Moving from paper to digital workflows

End-to-end digital workflows make processes faster, more transparent, and more secure. Replacing manual approvals and paper records with digital transactions ensures accountability while reducing the opportunity for errors or fraud.

Integrated workflows should reflect real financial operations—budgeting, procurement, payments, and reporting—and be tailored to local connectivity realities. Approvals and oversight can be embedded in the system design, enhancing control without slowing progress.

6. Connecting finance to service delivery

Centralised finance systems should link money to outcomes. This means connecting financial information with sectoral data—such as health, education, and infrastructure indicators.

With the right data standards and common identifiers, decision makers can assess the impact of

funding decisions, monitor delivery against targets, and reallocate resources as needed. This creates a feedback loop that strengthens performance management and supports evidence-based budgeting.

7. Building in transparency and accountability

Modern finance systems should support openness by design. That means making budget data, procurement outcomes, and performance information available to oversight bodies and the public.

Central platforms simplify reporting, improve audit readiness, and support real-time publication through open data portals. By embedding transparency features from the outset, governments can build trust and drive better governance outcomes.

8. Enabling cost efficiency at scale

Centralising finance systems unlocks savings across government. Shared platforms reduce the need for parallel infrastructure and systems maintenance. Consolidating services such as payroll or procurement also brings efficiency gains.

A unified system also makes it easier to implement reforms, monitor costs, and support whole-of-government strategies. Staff can be redeployed from administrative processing to analytical and strategic roles, improving overall capability.

Conclusion

Modernising public finance systems is not just a technical task—it’s a strategic imperative. Fragmented systems belong to a past era. Governments today face increasing complexity, public scrutiny, and demand for transparency. The path forward lies in centralisation: building a unified system that integrates agency finance processes into a coherent, responsive, and accountable framework.

With the right approach—one that respects both national goals and agency needs—governments can create finance systems that deliver clarity, control, and confidence. Reform isn’t easy, but with focus and coordination, it’s entirely achievable. And the benefits? Better decisions, stronger institutions, and public finances that work for everyone.