Are Your Account Reconciliations in Good Shape?
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Transcript of Are Your Account Reconciliations in Good Shape?
Bob Davenport
BlackLine Systems
Stefan Karl
SAP AG
Pat Withrow
The Dow Chemical Company
ARE YOUR ACCOUNT
RECONCILIATIONS IN GOOD
SHAPE?
Case Study: See How Dow Chemical Closes with Confidence
and Achieves Balance Sheet Integrity with BlackLine and SAP
March 2014
Stefan Karl Chief Solution Expert, Finance Solutions
SAP AG
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 2
The Reality of the New Normal for Finance Professionals
Increasing
globalization
Increased focus
on risk
Volatility in
economic
conditions
Ability to Make
Sound Decisions
to Benefit the
Organization
Pressure on
margins
Innovative
business models On-going
changes to
regulatory
requirements
Major influence on the Financial Close
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 3
Analyze Execute
Achieve real-time insight into the progress, quality and
financial results of the financial close process on
any device, for better business decisions and faster issue resolution
Increase the efficiency of your financial “close to disclose”
process through automation, integration, faster processes,
better collaboration, and intuitive self-service access to financial
information
Control
Ensure the quality and governance of the financial close through templates,
workflow, and an end-to-end management of the entire close
to meet regulatory disclosure mandates
Accounting and Financial Close Need for improved speed, compliance, and insight while reducing costs
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 4
Entity Close
Corporate Close
Accounting Reporting and Disclosure
Financial
Close
Governance
Process Controls
Master Data Governance for Financials
General Ledger
Sub-Ledgers
Intercompany
Reconciliation
Reporting
and Analysis
Consolidation
Disclosure
Management
SAP Accounting and Financial Close and
BlackLine Financial Close Suite for SAP® Solutions
Account
Reconciliation *
Financial Close Management
Financial Closing
cockpit Notes
Management
* Flagship product in the BlackLine Financial Close Suite for SAP® Solutions – an SAP-endorsed business solution
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 5
Account Reconciliation Requirements
CFOs / CEOs need to attest the correctness of the financial statements and internal control
systems of their entities and corporate group.
The purpose of reconciliation management is to provide reasonable assurance as to the
accuracy of financial data at a specific point in time.
The focus of account reconciliation is on the correctness of account balances because they
directly roll-up into the financial statements.
It is the process of comparing account data (on balance or item level) that exist in
two systems or locations (outside of systems, e.g. on paper), analyzing variances, and making
required corrections, so that the information is accurate.
There is a significant qualitative nature of Account Reconciliation. The assessments have to
be documented by relevant calculations, clear and complete explanations, and copies of
supporting documents in compliance with company policy.
The process and results of reconciliations must be easy to track and verify, and may be
checked and signed-off by auditors.
Often, the requirement is also named Balance Sheet Reconciliation.
Solution Recommendation
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 7
Reconciliation Functionality in SAP ERP
Financial Accounting
Fixed Assets
Accounts Payable
Accounts Receivable
Leverage your
SAP ERP system
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 8
Reconciliation Functionality in SAP ERP – Example
however,
just running
such reports
is not
sufficient
...
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 9
SAP Financial Closing Cockpit
If you already
use SAP
Financial
Closing cockpit
for Entity Close,
leverage it
also for
executing
reconciliation
functionality in
ERP and for
documenting
its results
...
still you need
more
...
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 10
BlackLine Account Reconciliation • Stand-alone on-demand solution
• Extraction of source data from all relevant systems, roles-based approach
• Automatic matching of extracted data with configurable business rules
• Dedicated process and workflow management organized around accounts
• Auto-certification for low risk accounts, templates-based reconciliation, etc.
• Management dashboards and extensive reporting
Account Reconciliation
Recommended Solution Architecture – Leverage SAP and BlackLine
SAP ERP • Reconciliation functionality, accrual engine,
• Bank communication management, ...
SAP Financial Closing cockpit + Automation Component * • No dedicated solution for account reconciliation, but leverage if available
• Planning, execution, monitoring, documentation of reconciliation tasks
• Combine reconciliation tasks with „normal“ closing tasks
• Manual, semi-automatic or automatic evaluation of results
SAP ERP
Other ERP Other Data
* if already used for entity close
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 11
SAP and BlackLine Solution Architecture
Bob Davenport Sr. Application/Implementation Consultant
BlackLine Systems
ABOUT US
• Global headquarters in Los Angeles with regional main offices in London and Sydney
• More than 750 clients (many in the Fortune 500/Global 1000)
• Over 85,000 users worldwide in 100+ countries
• First to market and offer software to automate the entire financial close process
• BlackLine Certified Implementation Professionals all around the world
USERS OFFICES CERTIFIED PARTNERS
100+ COUNTRIES
85,000+ USERS
GLOBAL DEPLOYMENT
• The BlackLine Financial Close Suite for SAP® Solutions is
an SAP-endorsed business solution and is the only financial
close solution to achieve this
• Solutions endorsed by SAP are complementary to SAP
software offerings, have been specifically integrated with
SAP solutions and tested by SAP
• BlackLine’s SAP Connector seamlessly integrates BlackLine
to SAP Financials
SAP PARTNERSHIP
My biggest challenge around the closing process is: a) Lack of visibility b) Little/no standardisation of reconciliations c) Too many manual processes d) Unclear ownership of tasks e) Other
EFFICIENCY, SPEED & VISIBILITY REDUCED COSTS AND RISKS CONTROLLED FINANCIAL CLOSE
BLACKLINE PROVIDES
POLICIES AND PROCEDURES
WORLD-CLASS PROCESS
STANDARDIZATION
AVAILABILITY TRAINING
CONTROL
BLACKLINE PROCESS
• REAL-TIME MONITORING AND REPORTING
• CONTROLLED PROCESS
• DATA INTEGRITY & INTEGRATION
• SIMPLE, SECURE SaaS SOLUTION
BLACKLINE FINANCIAL CLOSE SUITE FOR SAP®
SOLUTIONS
How are you currently handling account reconciliations? a) BlackLine b) Excel c) Other third-party software d) Internally developed tool/system e) Doing manually
ACCOUNT RECONCILIATION: BLACKLINE HIGHLIGHTS & BENEFITS
• Used for entire balance sheet (pre-paids, accruals, bank, sub-
ledger, debt, equity, etc.)
• Auto-certification of low risk reconciliations
• Templates-based process for standardization and quality
• Supporting documents – can be saved/accessed from
within the system
• Approval workflow – multiple levels with flexible scheduling
• Automated e-mail alerts for proactive notification/monitoring
• Reporting for real-time status updates
• Centralised, global access – anywhere, anytime
• Multi-currency AND multi-language (available in 15 languages!)
• Easy integration with existing ERP, GL systems
WORRY-FREE SECURE SAAS SERVICE
• No software to maintain or install
• Quick implementation
• Hot disaster recovery built-in
• Encryption of data in transmission and at rest
• Redundant world-class data centers – US & EU
• First and only financial close software provider to successfully
complete the following information security and controls audits:
– ISO 27001
– SSAE 16 SOC 1, SOC 2, SOC 3
– ISAE 3402
SAP CONNECTOR
• Delivered by BlackLine as an ABAP add-on which can be easily
installed on the customer’s SAP ERP system
• Allows designated users to load SAP balances and information
directly to BlackLine
• No extra programming required
• Uses pre-defined SAP security model and connection settings – no
security changes required
• Company Code, Account, Business Area, Trading Partner and Profit
Center level balances
• Other financial data – eg. Accounts Payable, Accounts Receivable
and Fixed Asset sub-ledger data, Currency Rates, etc.
ROI & CUTTING COSTS
• Auto-certification
• Increased staff productivity
• Reduced paper, printing, storage
overhead, auditor fees
• Improved process management
• Faster close
Return on investment is one of the most important indicators of value
MeadWestVaco Corporation
ROI: 495% Payback: 2 Months
Cox Communications
ROI: 227% Payback: 6 Months
Education Management Corporation
ROI: 138% Payback: 10 Months “Using BlackLine software alongside SAP applications
has greatly increased the visibility, efficiency and
accuracy surrounding our account reconciliation
process. We now have a completely electronic and
paperless process for how we review reconciliations.”
Laura Darbro, Zurich
VP of Close Operations and General Accounting
EXECUTIVE DASHBOARDS
Dropdown menus make it
easy for users to switch between
roles and periods.
ACCOUNT GRID
Quickly see statuses of
account reconciliations,
account identifiers, risk,
currency, balance and unidentified differences.
BANK ACCOUNT RECONCILIATION
Easily add comments or
supporting documents to the
reconciliation.
ADDITIONAL INFORMATION
Additional information such
as the account type, preparer and approver,
company policy, and procedures
are easily accessible within the application.
AMORTIZABLE PREPAID RECONCILIATION
Add comments or supporting
documents to the reconciliation,
helping to ensure completeness and
simplify the review process.
MATCHED/UNMATCHED GRID
Easily identify
unmatched and matched transactions.
REPORTING
Reporting gives management real-time information to better
manage their processes
REPORTING – MY FAVORITE REPORTS
• Users can move frequently
used reports into their My Favorites Folder.
• Those reports can be run or scheduled.
• The reports can be edited (such as adding or deleting columns, filtering, and sorting) and saved to meet the users needs.
SAMPLE REQUIRED ADJUSTMENTS REPORT
Dow.com
Case Study: See how Dow closes with confidence using BlackLine and SAP
Pat Withrow Accounting Director The Dow Chemical Company
The Dow Chemical Company
38
HEADQUARTERS IN MIDLAND, MI
FORTUNE 50 COMPANY
53,000 EMPLOYEES WORLDWIDE
MORE THAN 6,000 PRODUCTS WITH
CUSTOMERS IN 180 COUNTRIES
201 SITES IN 36 COUNTRIES
SALES OF US$57 BILLION IN 2013 SAP CUSTOMER SINCE 1988
BLACKLINE CUSTOMER SINCE 2012
Agenda
• Case for change
• Why BlackLine?
• Our implementation journey
• Reaping the benefits
• Phase 2—what‘s next?
39
Case for Change
• Drive for efficiency and reduction in workload and stress in our
Controllers organization
• Over 1,000 people involved in the account reconciliation process each
quarter in hundreds of legal entities, preparing approximately 250,000
reconciliations
• Process was Excel based with no standardization—electronic and
paper copies stored ‘somewhere’ throughout the world
• Review and approval process was a significant burden on our
managers and came at a critical time in our closing process
• Time spent reconciling zero balance and low value accounts
• Needed to free up resources for our SAP implementation, M&A
activities and other high value projects
40
What was working well…
• An established global account reconciliation policy
• Account reconciliations were a key control and a critical area of focus
during our closing process
• Used a global risk based approach to assigning account reconciliation
priorities and frequency of reconciliations
• Had put a lot of time and effort in addressing audit issues with the
process
• Had a process for assigning Preparers through tables that we built in
SAP
…but making changes to the existing process was not going to give us
the impact that we needed.
41
An Account Reconciliation Tool Top 10 Requirements
• Implement quickly with limited resources, particularly IT resources
• Easy to use
• Easy to administer
• Work with both SAP platforms—R2 and ECC
• Global
• Multi-currency
• Handle large volumes of data
• Meet all of our data and system security requirements
• Reduce time and effort spent in the process through automation
• Enhance and improve our internal controls
42
And the journey begins…
• March 2012: initial contact with BlackLine
• May 2012: On-site demo with leaders from all geographies
participating in person or by webcast
• June 2012: more dialogue, questions, demos, more questions… as
well as interviewing multiple clients at various stages of implementation
• August 2012: began negotiations on contract terms and prices as well
as an extensive review of data and system security
• September 2012: signed the contract to purchase the Account
Reconciliations and Variance modules and IT Pack (Matching came
later)
• October-November 2012: 30 day pilot with users across work
processes and geographies
• November 2012 : began implementation
43
Implementation
• Aggressive implementation approach:
Q1, 2013: North America
Q2, 2013: Europe and Latin America
Q3, 2013: Pacific and Intercompany
• Team of two Project Managers plus area implementation teams
• Needed 2 GL balance extracts—one for each SAP system
• Training needed to be global and with limited travel, address language
differences
• Focused effort on our more complex reconciliation—GR/IR, bank
reconciliations, intercompany accounts
…but Change Management was the biggest challenge!
44
Implementation Success
•Pilot was a tremendous learning opportunity
•Invest the time upfront to think through your design
•Sandbox is great for testing as well as training
•BlackLine Implementation Specialist was awesome
•System was easy to set up and configure
•Easy to load large volumes of data
•Blackline University training videos were used to train
preparers, reviewers and managers
•Visible management support
45
Immediate Benefits
One platform, one repository for all account reconciliations globally
No paper copies, all electronic signatures
Approvers saw an immediate reduction in workload
Auto certified 50% of key accounts and over 60% of all accounts at
start up
Transparency of account reconciliation process like we never had
before
Able to group accounts together to prepare one reconciliation Bank accounts, tax accounts, intercompany accounts
Highlighted key opportunities for improvement
Excellent feedback from our internal and external auditors First internal audit of BlackLine had very few business issues
Assurance that all accounts are being reconciled
46
Phase 2 and Beyond
Enhanced visibility through BlackLine allows us to:
• Focus on quality of reconciliations and best practices
• Standardize and centralize account reconciliations
• Expand use for local/statutory account reconciliations as well as
consolidations
• Increase opportunities to auto certify accounts
• Integrate with chart of accounts management
• Implement Variance module for trial balance and flux analysis
• Increase usage of the Enhanced Reporting tool
• Metrics and improvement targets
• Open items and aged items
• Implement Connector post SAP implementation
• Gain efficiencies through the use of the Matching module
47
Thank You
48
BLACKLINE APPLICATION DEMO
Questions?
EFFICIENCY, SPEED & VISIBILITY REDUCED COSTS AND RISKS CONTROLLED FINANCIAL CLOSE
DISCLAIMER
SAP, R/3, mySAP, mySAP.com, SAP NetWeaver®, Duet®, PartnerEdge, and other SAP products and services
mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and
in several other countries all over the world. All other product and service names mentioned are the trademarks of their
respective companies. Wellesley Information Services is neither owned nor controlled by SAP.