Authors: Molly Boyle, Director – SAP Solutions, BlackLine & Elizabeth Milne, Accounting and Financial Close Expert, SAP

This is Blog #10 in our Record to Report Blog Series. You can find the complete series outlined HERE.

SAP S/4HANA is helping companies transform the enterprise by providing powerful technology to optimize business processes, improve product quality, and enhance agility. Among this technology is SAP S/4HANA Finance, which provides solutions to address many areas including billing, revenue accounting, treasury management, profitability analysis, the financial close and more.

Accounting & Finance teams often find themselves in a unique position. They must be drivers of business transformation and stewards of change management while balancing a host of other priorities like regulatory compliance & reporting, talent retention & development, and providing strategic business support.

To this end, accounting leaders have looked for the right combination of SAP solutions to deliver both quick wins and long-term process transformation. SAP Account Substantiation & Automation by BlackLine & SAP S/4HANA Finance have proven to combine for powerful end-to-end automation addressing many use cases.

This blog will address why companies running or moving to SAP S/4HANA need SAP Account Substantiation & Automation by BlackLine by highlighting the top ways the BlackLine solutions augment SAP ERP functionality.

Balance Sheet Substantiation

Among the top benefits of SAP S/4HANA Finance is the Universal Journal – a table known as ACDOCA – which stores all finance transaction data in a single universal journal table and eliminates the need to reconcile data (i.e. subledgers to general ledgers) across tables in SAP.

Beyond the need to reconcile data within SAP, however, companies must also substantiate their balances. In other words, they must validate the completeness and accuracy of ending balances. This process involves more than simply agreeing information within the ERP, as it confirms the ERP data is correct by corroborating information in the general ledger with supporting information from outside sources such as invoices, contracts, schedules, and other documentation.

SAP Account Substantiation & Automation by BlackLine complements SAP S/4HANA Finance and transforms the balance sheet substantiation process. Without it, many accounting teams rely on manual, spreadsheet-based processes that takes too long, drain resources, and introduce unnecessary risk.

SAP Solution Extensions by BlackLine automate the substantiation process by providing configurable rules, auto-certification, and standardized reconciliation templates. Data from SAP and non-SAP sources is securely imported into the cloud, and leaders have visibility to the status of substantiation activities with the push of a button.

In addition, internal and external auditors can use read-only access to test reconciliation processes and validate balances and controls, which saves time and shifts audits to a self-service approach.

Transaction Matching

For those General Ledger accounts whose balances are comprised of a high volume of transactions – often thousands or even hundreds of thousands of lines – many accounting organizations have teams of people reconciling line items between SAP and other sources. This work is typically done in “rainbow spreadsheets” using v-lookups and other manual processes.

As discussed, SAP S/4HANA’s Universal Journal architecture eliminates some reconciliation with its single table architecture. In addition, SAP offers intelligent matching capabilities for certain processes like cash application and GR/IR.

SAP Account Substantiation & Automation by BlackLine provides a flexible transaction matching engine that complements SAP ERP to address data reconciliations across any type of account or data source. Organizations can match millions of transactions in seconds or minutes. The solutions also identify exceptions and suggested matches, which help focus accountants’ attention on potential risks. Adjustments can be created and posted directly from the cloud platform and posted to SAP in real-time, and reconciling items are automatically incorporated into the balance sheet substantiation process.

Journal Entry Management

Preparing, posting, approving, and validating manual journal entries is a top drain on accounting teams’ capacity. Further, journal entry testing is often one of the most time-consuming aspects of an audit.

SAP S/4HANA provides enhancements to the journal entry process compared to SAP ECC. Specifically, SAP Fiori provides an improved user interface and simplifies the process with fewer screen changes and fields to populate. SAP S/4HANA also offers resources to simplify the journal entry process with Similar Journey Entry, to replicate journals with minor changes, and Mass Processing, to upload directly from Excel. Workflows and other rules-based functionality can also be enabled for a more streamlined process.

SAP Account Substantiation & Automation by BlackLine extends and complements SAP S/4HANA with additional automation capabilities, real-time connectivity to SAP and other ERPs, and incremental audit benefits.

The journal entry functionality within SAP Account Substantiation & Automation by BlackLine is fully integrated with its account substantiation and transaction reconciliation capabilities. This allows for the automation of not just the journal entry, but the end-to-end accounting processes from end-to-end.

For example, manual journal entries are often identified during the balance sheet substantiation process. When this occurs, adjusting entries can be created and posted directly form the BlackLine cloud without having to leave the balance sheet substantiation process. Further, many recurring and non-recurring journal entries that impact the balance sheet and therefore must be substantiated at period-end. SAP Solution Extensions by BlackLine streamline this process by allowing users to prepare, support, and approve a journal entry in cloud platform, and then simply attach it to the corresponding account reconciliation. This eliminates the need for additional steps, approvals, and supporting documentation and allows auditors to trace the connection between activities.

Finally, SAP Account Substantiation & Automation by BlackLine can simplify and reduce audit testing. Isolating a population of manual journal entries is a challenge, as auditors often will not accept document type or other SAP criteria as a journal entry indicator. In addition, providing supporting documentation for testing samples can be time-consuming.

With the SAP Solution Extensions by BlackLine as the starting point and repository for all entries and support, including SAP and non-SAP ERPs, auditors can more easily understand the process, test completeness, and make self-service selections without additional company resources.

Fully Integrated for Your Success

Accounting processes for areas like prepaids, intangibles, payroll, T&E, leases, and many others involve multiple steps. These include the reconciliation of transactions across SAP and non-SAP sources, the calculation and recording of one or more journal entries, and ultimately the validation that ending balances are correct. SAP Account Substantiation & Automation by BlackLine addresses and automates all these steps in a unified platform that fully integrates with SAP S/4HANA.

SAP Account Substantiation & Automation by BlackLine is an SAP Solution Extension, a strategic third-party solution selected and premium qualified by SAP to extend other SAP software. BlackLine has been an SAP partner for more than 10 years and in 2021 was selected as SAP Pinnacle Partner of the Year – Solution Extensions.

Call to action: To learn more about process efficiency in the Close, join us and customers at the virtual event for Financial Close and Reporting.

Check out the rest of our series:

R2R Series Blog #1: Record to Report Blog Series Kick Off | SAP Blogs

R2R Series Blog #2: How to increase process efficiency in the financial close leveraging SAP’s Modern Finance and Risk Platform | SAP Blogs

R2R Series Blog #3: Why did the accountant cross the road? | SAP Blogs

R2R Series Blog #4: Ignite Your Growth of Bottom Line with SAP S/4HANA GR/IR | SAP Blogs

R2R Series Blog #5: Hard Close, Fast Close, Soft Close and Continuous Accounting | SAP Blogs

R2R Series Blog #6: Build vs Buy – 3rd Party Data Integration for SAP Central Finance | SAP Blogs

R2R Series Blog #7: Market Overview – SAP Contract and Lease Management | SAP Blogs

R2R Series Blog #8: Make your SAP S/4HANA for Central Finance implementation a success | SAP Blogs

R2R Series Blog #9 Automated Revenue Management | SAP Blogs