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Empower Accounting to manage and control the end-to-end financial close process by automating accounting workflows, providing a centralized and secure workspace to perform period-end accounting activities, and streamlining financial reporting.
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Increase accuracy and efficiency across your account reconciliation process and produce timely and accurate financial statements. Drive accuracy in the financial close by providing a streamlined method to substantiate your balance sheet.
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Standardize, accelerate, and centrally manage accounting processes – from month-end close tasks to PBC checklists – with hierarchical task lists, role-based workflows, and real-time dashboards.
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Streamline and automate detail-heavy reconciliations, such as bank reconciliations, credit card matching, intercompany reconciliations, and invoice-to-PO matching all in one centralized workspace.
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Create, review, and approve journals, then electronically certify, post them to and store them with all supporting documentation. Automatically create, populate, and post journals to your ERP based on your rules.
Elevate control in the cloud.
Unify all compliance documentation, projects, and stakeholders in one globally accessible, cloud platform to maximize visibility. Link controls to related risks, narratives, and projects, and ensure version control.
Continuously monitor for risk with automated fluctuation analysis.
Calculate and identify account balance and activity fluctuations automatically to continuously monitor for risk, ensure the effective and timely execution of critical management review controls, and support agile decision-making.
Simplify, standardize, and automate your financial close in SAP.
Streamline and automate activities in SAP with task scheduling and execution, activity monitoring, and outcome verification.
Maximize working capital and release cash from your balance sheet.
Maximize working capital with the only unified platform for collecting cash, providing credit, and understanding cash flow. Transform your accounts receivable processes with intelligent AR automation that delivers value across your business.
Apply customer payments to invoices automatically.
Transform your order-to-cash cycle and speed up your cash application process by instantly matching and accurately applying customer payments to customer invoices in your ERP.
Create and operate risk polices with dynamic insights.
Understand customer data and performance behaviors to minimize the risk of bad debt and the impact of late payments. Monitor changes in real time to identify and analyze customer risk signals.
Release cash from customers and reduce DSO.
Improve the prioritization of customer calls, reduce days sales outstanding, and watch productivity rise with more dynamic, accurate, and smarter collection management processes.
Resolve customer disputes promptly to collect debt.
Accelerate dispute resolution with automated workflows and maintain customer relationships with operational reporting. Unlock full control and visibility of disputes and provide better insight into how they impact KPIs, such as DSO and aged debt provisions.
Maximize your time with data-driven prioritization.
Make the most of your team’s time by automating accounts receivables tasks and using data to drive priority, action, and results. Monitor and analyze user performance, ensuring key actions quickly.
Turn payment data into actionable, real-time intelligence.
Automatically process and analyze critical information such as sales and payment performance data, customer payment trends, and DSO to better manage risk and develop strategies to improve operational performance.
Unlock growth capacity with tax-effective intercompany operations.
Centralize, streamline, and automate end-to-end intercompany operations with global billing, payment, and automated reconciliation capabilities that provide speed and accuracy. Ignite staff efficiency and advance your business to more profitable growth.
Automate, optimize, and manage intercompany non-trade transactions.
Ensure consistent regulatory and tax compliance by automating non-trade transactions and invoices while enforcing trading relationships and policies, as well as required taxes and transfer pricing.
Centralize, streamline, and automate intercompany reconciliations and dispute management.
Seamlessly integrate with all intercompany systems and data sources. Automatically identify intercompany exceptions and underlying transactions causing out-of-balances with rules-based solutions to resolve discrepancies quickly.
Streamline and automate intercompany transaction netting and settlement to ensure cash precision.
Enable greater collaboration between Accounting and Treasury with real-time visibility into open transactions. Integrate with treasury systems to facilitate and streamline netting, settlement, and clearing to optimize working capital.
Get set up quickly for a streamlined and automated close.
The path from traditional to modern accounting is different for every organization. BlackLine’s Modern Accounting Playbook delivers a proven-practices approach to help you identify and prioritize your organization’s critical accounting gaps and map out an achievable path to success.
Save time and cost, decrease risk, and elevate the organization.
BlackLine’s foundation for modern accounting creates a streamlined and automated close. We’re dedicated to delivering the most value in the shortest amount of time, equipping you to not only control close chaos, but also foster F&A excellence.
Invest in your future by unifying and automating accounting work.
To sustain timely performance of daily activities, banking and financial services organizations are turning to modern accounting and finance practices. It’s no longer a matter of whether or not to digitally transform. It’s a matter of when and how.
Adapt to changing consumer preferences with agile accounting.
To mitigate financial statement risk and increase operational effectiveness, consumer goods organizations are turning to modern accounting and leading best practices. Simply sticking with ‘the way it’s always been done’ is a thing of the past.
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While you are innovating to produce safe, reliable, and sustainable products and services, our solutions help accounting teams save time, reduce risk, and create capacity to support your organization's strategic objectives.
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Working capital, cash flows, collections opportunities, and other critical metrics depend on timely and accurate processes. Ensure services revenue has been accurately recorded and related payments are reflected properly on the balance sheet.
Unlock capacity and strengthen resilience by automating accounting.
To respond and lead amid supply chain challenges demands on accounting teams in manufacturing companies are higher than ever. Guide your business with agility by standardizing processes, automating routine work, and increasing visibility.
Tie out millions of transactions automatically.
Retailers are recalibrating their strategies and investing in innovative business models to drive transformation quickly, profitably, and at scale. Save time, reduce risk, and create capacity to support your organization's strategic objectives.
Transform the way you work.
You've transformed the way we experience the world. It's time to embrace modern accounting technology to save time, reduce risk, and create capacity to focus your time on what matters most.
BlackLine is part of your SAP financial mission control center. Our solutions complement SAP software as part of an end-to-end offering for Finance & Accounting. BlackLine solutions address the traditional manual processes that are performed by accountants outside the ERP, often in spreadsheets.
Global brands and the fastest growing companies run Oracle and choose BlackLine to accelerate digital transformation. BlackLine delivers comprehensive solutions that unify accounting and finance operations across your Oracle landscape.
Gain global visibility and insight into accounting processes while reducing risk, increasing productivity, and ensuring accuracy. Close the gaps left in critical finance and accounting processes with minimal IT support.
Adapt and innovate with a hyperconnected Accounting function and give everyone the insights and freedom to thrive by connecting your data, processes, and teams with intelligent automation solutions for accounting needs.
ESG is an opportunity for F&A teams to have a direct impact on how their organizations interact with the communities around them and how they deliver value to their stakeholders.
Rising labor costs and shifting expectations are contributing to unprecedented change in the labor market and altering the way companies and their executives think about talent management.
ERP transformations are business transformations. Finance and accounting expertise is not only needed to prevent ERP transformation failures, but F&A leaders are poised to help drive project plans and outcomes.
In good company.
More than 4,000 companies of all sizes, across all industries, trust BlackLine to help them modernize their financial close, accounts receivable, and intercompany accounting processes.
Powerful technology is only part of the story.
To truly transform your finance and accounting processes, you need the guidance of a trusted partner. Our proven approach has helped thousands of customers identify and address bottlenecks to free up capacity, strengthen controls, and deliver measurable results.
Your playbook for rapid success and proven value.
Using our unique experience and expertise, we will help you identify your most pressing accounting challenges and quickly deploy our software by providing a clear vision and predictable, confident delivery and implementation.
Guided, connected, and committed to your success.
BlackLine Services combine leading practices and expert guidance with best-in-class technology to help your F&A organization seamlessly implement sound processes and solutions, identify new opportunities for accounting optimization, and expand into areas you never imagined you would have the time to tackle.
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Our API-first development strategy gives you the keys to integrate your finance tech stack - from one ERP to one hundred - and create seamless data flows in and out of BlackLine.
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BlackLine users around the world get access to key resources to develop expertise, interact with peers in F&A to exchange ideas and leading practices, and share their feedback to guide future product development.
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BlackLine is a high-growth, SaaS business that is transforming and modernizing the way finance and accounting departments operate. Our cloud software automates critical finance and accounting processes. We empower companies of all sizes across all industries to improve the integrity of their financial reporting, achieve efficiencies and enhance real-time visibility into their operations.
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July 07, 2022
5 minute read
Part 1 of this series provided a high-level look at the process, tax, and regulatory complexities of intercompany service transactions. Part 2 took a deeper dive into the process-related challenges. In Part 3, we review the tax-related issues that can complicate these transactions.
When a multinational company provides a tangible product to its various entities, there’s usually little question about the validity of the transaction. You can see and touch the product and account for the quantity picked at a warehouse, shipped, and received. If an entity in France receives a shipment of 500 laptops from a company’s main warehouse in the UK, the transaction is easily audited, and any associated tax easily calculated, paid, and reported.
But when a global company provides services to multiple entities, the details of the transaction may be less clear—because services, by their nature, can be abstract. As part of everyday business operations, organizations routinely provide a variety of services to entities in other parts of the world. One of the greatest tax risks is an inability to defend the tax deductibility of an intercompany service transaction.
To allow a tax deduction for an intercompany service transaction, a country’s tax authorities will require details on the nature of the service provided, evidence that the entity billed for the service received a benefit, and proof that both the transfer price and the dollar amount allocated to a given entity were calculated and applied correctly.
When it comes to providing sufficient details on the service provided, many intercompany invoices don’t provide much specificity at all. The more abstract the service type, the more challenging it is to define and be specific about.
For instance, if a centrally based Human Resources (HR) director consults with a colleague in another entity on how to recruit new hires for senior-level roles, the intercompany invoice might simply list the service as “HR services.” Or if a member of the in-house legal counsel team consults with a particular entity on a litigation matter, the intercompany invoice might read “legal services.”
While the accounting staff receiving the invoice might deem that description sufficient to approve payment, the tax authorities will require much more detail to allow a tax deduction. If the organization’s systems and processes don’t make it easy to document the necessary level of detail, it will be difficult to provide the specificity required to defend tax deductibility—increasing the risk of losing lucrative deductions.
Global companies can also run into trouble demonstrating that the entity billed for the service derived benefit from it. In the HR example above, if the entity receiving the service also employs its own HR team, tax authorities might challenge whether that entity required or derived value from the consultation services provided. If the consultation between the central HR function and the other entity happened primarily by phone, there may be little documentation on how that advice was used and to what benefit. The more subjectivity involved, the more likely the tax authorities will scrutinize the transaction and challenge the tax deduction.
Even if there is sufficient detail about the service provided and documentation that the entity benefitted from it, the amount billed could be called into question. Tax authorities typically look at two considerations:
Was an appropriate transfer price mark-up charged?
To satisfy this consideration, it’s necessary to document that the transfer price mark-up was calculated appropriately and consistently. That involves calculating the internal cost to provide the service, then applying a markup based on what a third party would charge for the same service, arriving at an “arm’s length” price.
Was the portion of the total invoice allocated proportionally to all entities involved?
For this second consideration, the organization must demonstrate that each entity involved has been charged proportionally, using an allocation key that’s proportional to the level of services received, e.g., the number of employees in the case of HR services.
Aside from the tax deductibility issues, intercompany service transactions can create challenges when it comes to applying VAT and other indirect taxes. It is difficult to apply the correct indirect tax to a service that is not clearly defined. Conversely, describing intercompany services in detail makes it easier to apply, pay, and report on indirect taxes accurately.
The nature of the intercompany process itself has the potential to trigger tax problems.
For example, many multinationals use a shared service center approach, which often reduces costs but also reduces the organization’s visibility into the entire intercompany transaction function. A lack of visibility and oversight can inadvertently result in the assessment of BEAT (base erosion and anti-abuse tax). Specifically, if a global company consolidates intercompany costs in the US by charging foreign services costs into the US first, then re-allocates them to entities in other countries, the organization could be hit with a 10% BEAT in the US. When that tax is assessed on millions or billions in intercompany transactions, the additional, unnecessary costs can add up significantly.
A lack of visibility and oversight likewise can create tax issues for organizations that consolidate property rent expenses. Multinationals often consolidate such costs through a single property management vendor, then charge the expenses intercompany, across various countries. However, doing so incurs a nonrecoverable indirect tax. If the staff members responsible for the intercompany transaction function are aware of the implications, they can adapt their processes to avoid the unnecessary indirect tax expense.
Additionally, a lack of sufficient documentation on intercompany charges often stems from a lack of awareness that charges for shared services should be allocated across multiple entities for accounting and tax purposes. The company can’t fully deduct a particular shared services role in the country where the role resides if some of the staff’s work is done on behalf of entities in other countries.
Similarly, the decentralized nature of the intercompany function presents process issues that can create tax problems. In the case of transfer price mark-ups, it’s possible the same charge could inadvertently have a mark-up applied more than once if the charge passes through more than one entity. Or an entity might use a billing route that creates a higher tax liability, simply because it’s not aware that a different billing route would have avoided that liability.
When intercompany service transactions are handled manually, the inherent tax complexities tend to escalate. In contrast, an automated intercompany process guided by robust technology can ensure that intercompany services are detailed with more specificity, the transfer price is arrived at properly, the costs are allocated across entities appropriately, and the right indirect tax is applied and paid. In addition, automation can give detailed and immediate insight into the cost details of the services provided and their allocation, which greatly enhances the ability to defend the tax deductibility of the charges.
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