SAP’s Corporate Finance team is focused on improving efficiency and strengthen risk management in their financial close processes
What motivated the SAP Corporate Finance team to consider SAP Account Substantiation and Automation by BlackLine as a part of their approach to improve the financial close?
With the introduction of the IFRS16 accounting standard, changes in existing accounting processes were required. The SAP Accounts Payables team needs to make sure that incoming lease invoices match monthly liabilities through straight-line depreciation from the capitalization of the leased contract. However, due to an internal IT process restriction, the related accounts are not “open item-managed” which makes the reconciliation particularly difficult. This led to the following challenges:
- Complex and manually-handled process
Often the reconciliation needs to happen on an individual lease contract level. This complexity is a challenge given the base of around 35,000 contracts. The global accounts payable team is spread over three continents and is responsible for over 140 legal entities. The colleagues are in 10 different teams. As such, managing the process and all process changes might be difficult at times.
- Massive transaction volume
Currently there are around 1.5 million transactions on the accounts, a volume that grows by an additional 20-40 thousand transactions per month.
- Lack of efficiency and visibility
There are always optimization initiatives underway focused on increasing efficiencies and reducing costs related to administrative processes. On the other hand, there was a challenge to secure higher visibility and transparency in this compliance-related process. Visibility is required to enable everyone is on track to produce complete, accurate and timely financials.
Streamline accounting process while saving time and enhancing accuracy
What is SAP Account Substantiation and Automation?
SAP Account Substantiation and Automation is a purpose-built SaaS application that automates and streamlines some of the most labor intensive financial close processes. The solution addresses the risks associated with and time spent on traditionally manual month-end processes, including transaction matching, reconciliations and balance sheet substantiation, and journal entry capabilities.
Specifically, the transaction matching function highlights differences between any two data sets. The balance sheet substantiation and reconciliation function supports the completeness and accuracy of financial statement balances by preparing them for review and sign-offs by accountants. The journal entry processing function prepares financial postings, including validations and approvals, before posting to SAP S/4HANA. In summary, SAP Account Substantiation and Automation eliminates or reduces routine, manual tasks while increasing visibility and standardization.
SAP’s approach to tackling this use case
Given the specifics of the SAP use case, it was decided to use 3 modules together – matching, journal entry and accounts reconciliation – in a connected process. In addition, the cloud-based system is linked to SAP S/4HANA which is the source for the transactions, account balances and exchange rates. To illustrate the process, the team will start by matching, then will use automated journal definitions for particular types of balances, and lastly the team will work on account reconciliations.
Expected benefits of the improved process
- Time savings: Highly reduced processing time with better control
With SAP Account Substantiation and Automation, teams can save time as the solution enables a more efficient close process. They can achieve operational excellence and reduce processing time without losing compliance control. It takes just minutes to process high volumes of transactions. The finance team can easily configure own personalized pass rules without the need to involve any IT resources. This facilitates fast set-up time, which will enable the team to set up most of what is needed almost immediately.
- Accuracy: Advanced risk management minimizes errors
The solution eliminates spreadsheet errors, improving the quality and accuracy of the financial close. Accountants can gain greater control over the complex, manual process while dramatically lowering this particular compliance risk associated with the financial close. By ensuring balance sheet integrity, the team can be confident that the numbers are correct.
- Better visibility with reduced cost
By standardizing and automating manual reconciliations, teams can eliminate those costly, tedious processes. At the same time, dashboards and reports provide an oversight of the activities in real-time. This higher visibility function will enable teams to reduce risk and close with control.
In conclusion, by utilizing this solution, the SAP team is expected to gain greater efficiency in their finance processes, reduce audit costs, and obtain better control and visibility – while dramatically lowering the risks associated with financial closing.
Interested in learning more? You can calculate the value SAP Account Substantiation and Automation can add to your business here.