BlackLine Blog

August 02, 2022

Don’t Delay Your Intercompany Journey During Transition to SAP S/4HANA

Digital Transformation
2 Minute Read

BlackLine Magazine

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As companies consider a transition to SAP S/4HANA, it’s crucial that executives evaluate issues tangential to their ERP journey. As new intercompany financial management requirements emerge, teams should ask:

  • What value does an intercompany solution provide in conjunction with an ERP?

  • Should improving intercompany practices be considered alongside S/4HANA adoption?

Don’t wait to adopt an intercompany solution. Teams may feel that they have so much on their plates when contemplating ERP migration that they don’t want to look at the issue of an intercompany solution. But the truth is that examining intercompany processes and implementing a comprehensive intercompany solution will make any ERP adoption or transition more successful and more valuable.

Here’s why.

Setting the Vision

One reason for deploying an intercompany solution together with a new ERP adoption or migration is clarification of vision for the future of company financial operations.

Intercompany transactions represent an estimated 80% of global trade, making intercompany financial management an imperative when considering finance and accounting automation for any multinational company. Getting full vision into all intercompany processing allows team members executing the ERP adoption to know what they must solve for and how to connect ERP functions with what would otherwise be a nebulous, black box of intercompany functions and conflicts.

Only by holistically identifying these enterprise requirements can an ERP migration support company vision and goals.

An Intercompany Solution Makes Any ERP Journey More Effective

Implementing an intercompany solution such as BlackLine makes the journey of adopting or migrating to a new ERP more effective. Considering intercompany financial management before, or simultaneous to, the core finance functions of the ERP ensures a highly intentional, efficient design of the ERP system. Getting clarity on intercompany data and processes allows leaders implementing an ERP to recognize the material types of transactions they need to focus on from a policy and organizational perspective.

What’s more, sound intercompany financial management eases sticky “internal” issues that could otherwise frustrate ERP implementation.

BlackLine ensures that companies achieve successful ERP migrations by:

  • Clearing open intercompany items in advance to streamline cutovers

  • Establishing standard global intercompany processes that remain consistent across the business throughout the migration and beyond

  • Freeing up valuable F&A resources to support the ERP migration

  • Enabling timely compliance as regulatory landscapes continue to evolve during ERP migration

  • Centralizing intercompany data in a way that creates a virtual global intercompany subledger that enables speed and accurate validation of financial data before, during, and after each cutover

Over the years, many ERP-related functions and issues will see frequent change. Companies who have a solid intercompany layer established or put one in place in parallel to an ERP migration gain a significant advantage in systematizing and dealing with ERP tuning and modifications.

Opportunity for Rapid Improvement

The immensity of ERP implementations or migrations require several years—sometimes longer. Conversely, time-to-value for an intercompany solution can begin in a matter of months. Intercompany processes that are historically manual and disjointed can be radically improved in a comparably short time.

This begins by examining the intercompany process holistically, from policy governance through to dispute management and settlement. Begin by identifying the different billing processes and systems that are ripe for automation and transform the most manual or risk-prone processes. There are also going to be processes that are less complex and can be repeatable. Look to automate them first over processes that change month over month or are very ad hoc.

Consider tackling shared vendor invoices. IT technology costs such as mobile phones, computing, and servers are usually centralized costs that need to be brought into the company, audited, validated, reviewed, paid, and then internally invoiced to the corporate entities that are actually consuming the costs. An effective intercompany solution can accomplish this across a multinational in six months or less.

Marrying Intercompany Financial Management with ERP Adoption

When intercompany accounting is not an afterthought of ERP implementation, outcomes are improved, and costly rework is prevented. 

BlackLine helps companies systematize the management of intercompany processes, so that ERP adoptions and migrations, including SAP S4/HANA, go smoothly, saving potentially millions in false starts, dead ends, and rework.

Get your copy of a global survey research report that examines essential questions about the state of intercompany at multinational companies.

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