are your account reconciliations in good shape?

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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

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This presentation demonstrates how finance, accounting, audit and compliance executives can further ensure the integrity of their balance sheets—and ultimately financial reports—by implementing software to automate the traditionally manual, labor-intensive and spreadsheet-driven account reconciliation process.

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Page 1: 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

Page 2: Are Your Account Reconciliations in Good Shape?

Stefan Karl Chief Solution Expert, Finance Solutions

SAP AG

Page 3: Are Your Account Reconciliations in Good Shape?

© 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

Page 4: Are Your Account Reconciliations in Good Shape?

© 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

Page 5: Are Your Account Reconciliations in Good Shape?

© 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

Page 6: Are Your Account Reconciliations in Good Shape?

© 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.

Page 7: Are Your Account Reconciliations in Good Shape?

Solution Recommendation

Page 8: Are Your Account Reconciliations in Good Shape?

© 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

Page 9: Are Your Account Reconciliations in Good Shape?

© 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

...

Page 10: Are Your Account Reconciliations in Good Shape?

© 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

...

Page 11: Are Your Account Reconciliations in Good Shape?

© 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

Page 12: Are Your Account Reconciliations in Good Shape?

© 2014 SAP AG or an SAP affiliate company. All rights reserved. 11

SAP and BlackLine Solution Architecture

Page 13: Are Your Account Reconciliations in Good Shape?

Bob Davenport Sr. Application/Implementation Consultant

BlackLine Systems

Page 14: Are Your Account Reconciliations in Good Shape?

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

Page 15: Are Your Account Reconciliations in Good Shape?

USERS OFFICES CERTIFIED PARTNERS

100+ COUNTRIES

85,000+ USERS

GLOBAL DEPLOYMENT

Page 16: Are Your Account Reconciliations in Good Shape?

• 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

Page 17: Are Your Account Reconciliations in Good Shape?
Page 18: Are Your Account Reconciliations in Good Shape?
Page 19: Are Your Account Reconciliations in Good Shape?

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

Page 20: Are Your Account Reconciliations in Good Shape?

EFFICIENCY, SPEED & VISIBILITY REDUCED COSTS AND RISKS CONTROLLED FINANCIAL CLOSE

BLACKLINE PROVIDES

Page 21: Are Your Account Reconciliations in Good Shape?

POLICIES AND PROCEDURES

WORLD-CLASS PROCESS

STANDARDIZATION

AVAILABILITY TRAINING

CONTROL

Page 22: Are Your Account Reconciliations in Good Shape?

BLACKLINE PROCESS

Page 23: Are Your Account Reconciliations in Good Shape?

• REAL-TIME MONITORING AND REPORTING

• CONTROLLED PROCESS

• DATA INTEGRITY & INTEGRATION

• SIMPLE, SECURE SaaS SOLUTION

BLACKLINE FINANCIAL CLOSE SUITE FOR SAP®

SOLUTIONS

Page 24: Are Your Account Reconciliations in Good Shape?

How are you currently handling account reconciliations? a) BlackLine b) Excel c) Other third-party software d) Internally developed tool/system e) Doing manually

Page 25: Are Your Account Reconciliations in Good Shape?

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

Page 26: Are Your Account Reconciliations in Good Shape?

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

Page 27: Are Your Account Reconciliations in Good Shape?

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.

Page 28: Are Your Account Reconciliations in Good Shape?

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

Page 29: Are Your Account Reconciliations in Good Shape?

EXECUTIVE DASHBOARDS

Dropdown menus make it

easy for users to switch between

roles and periods.

Page 30: Are Your Account Reconciliations in Good Shape?

ACCOUNT GRID

Quickly see statuses of

account reconciliations,

account identifiers, risk,

currency, balance and unidentified differences.

Page 31: Are Your Account Reconciliations in Good Shape?

BANK ACCOUNT RECONCILIATION

Easily add comments or

supporting documents to the

reconciliation.

Page 32: Are Your Account Reconciliations in Good Shape?

ADDITIONAL INFORMATION

Additional information such

as the account type, preparer and approver,

company policy, and procedures

are easily accessible within the application.

Page 33: Are Your Account Reconciliations in Good Shape?

AMORTIZABLE PREPAID RECONCILIATION

Add comments or supporting

documents to the reconciliation,

helping to ensure completeness and

simplify the review process.

Page 34: Are Your Account Reconciliations in Good Shape?

MATCHED/UNMATCHED GRID

Easily identify

unmatched and matched transactions.

Page 35: Are Your Account Reconciliations in Good Shape?

REPORTING

Reporting gives management real-time information to better

manage their processes

Page 36: Are Your Account Reconciliations in Good Shape?

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.

Page 37: Are Your Account Reconciliations in Good Shape?

SAMPLE REQUIRED ADJUSTMENTS REPORT

Page 38: Are Your Account Reconciliations in Good Shape?

Dow.com

Case Study: See how Dow closes with confidence using BlackLine and SAP

Pat Withrow Accounting Director The Dow Chemical Company

Page 39: Are Your Account Reconciliations in Good Shape?

The Dow Chemical Company

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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

Page 40: Are Your Account Reconciliations in Good Shape?

Agenda

• Case for change

• Why BlackLine?

• Our implementation journey

• Reaping the benefits

• Phase 2—what‘s next?

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Page 41: Are Your Account Reconciliations in Good Shape?

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

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Page 42: Are Your Account Reconciliations in Good Shape?

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

Page 43: Are Your Account Reconciliations in Good Shape?

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

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Page 44: Are Your Account Reconciliations in Good Shape?

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

Page 45: Are Your Account Reconciliations in Good Shape?

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!

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Page 46: Are Your Account Reconciliations in Good Shape?

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

Page 47: Are Your Account Reconciliations in Good Shape?

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

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Page 48: Are Your Account Reconciliations in Good Shape?

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

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Page 49: Are Your Account Reconciliations in Good Shape?

Thank You

48

Page 50: Are Your Account Reconciliations in Good Shape?

BLACKLINE APPLICATION DEMO

Page 51: Are Your Account Reconciliations in Good Shape?

Questions?

[email protected]

EFFICIENCY, SPEED & VISIBILITY REDUCED COSTS AND RISKS CONTROLLED FINANCIAL CLOSE

Page 52: Are Your Account Reconciliations in Good Shape?

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.