Improving Transparency, Auditability, and Enhancing Finance Controls
To drive for efficiency and reduction in workload and stress in the controller organization, The Dow Chemical Company started the search for a cloud-based finance controls and automation platform that would enhance an already established process. Pat Withrow, accounting director with Dow, knew that although they had well-defined policies in place, Dow still needed a case for process change. “But making changes to the existing process was not going to give us the impact we needed,” said Withrow.
Even with a structured policy framework, still over 1,000 people were involved in the account reconciliation process each quarter in hundreds of legal entities, preparing approximately 250,000 reconciliations. The process was Excel based with no standardization. Withrow describes the previous process. “There was no central database and no standardization; electronic and paper copies were stored in locations all over the world, which made the review and approval process a significant burden.” Too much time was spent reconciling zero balance and low value accounts, and the need to free up resources for the SAP implementation, M&A activities, and other high value projects arose.
The journey to find a cloud-based account reconciliation tool that met certain top requirements began. Chief among them were speed to implementation, ease of use, and compatibility with Dow’s existing policies, such as its preparation and certification timelines for key accounts. Another requirement was compatibility with both SAP R/2 and SAP ERP, as Dow’s intent was to automate reconciliations for its various businesses and operating divisions. After extensive review of data and system security, Dow began to implement BlackLine in November 2012.
Dow’s aggressive global implementation approach included regions in North America, Europe, Latin America, Pacific and Intercompany paid off with immediate benefits. After partnering with BlackLine, now Dow has one platform, one repository for all accounts reconciliations globally and transparency of account reconciliation process like never before.
Turning to the Cloud
Once Dow decided to automate its account reconciliation processes, it created a top 10 list of requirements for an automation tool. Chief among them were speed to implementation, ease of use, and compatibility with Dow’s existing policies, such as its preparation and certification timelines for key accounts. Another requirement was compatibility with both SAP R/2 and SAP ERP, as Dow’s intent was to automate reconciliations for its various businesses and operating divisions irrespective of where each division stood in its SAP ERP upgrade.
After demoing account reconciliation software from several vendors, Dow decided to implement the SAP-endorsed software-as-a-service (SaaS)-based Financial Close Suite for SAP Solutions from SAP gold partner BlackLine. (For more details about the BlackLine solution, refer to the sidebar at the end of the article.)
Any concerns over cloud security were mitigated quickly when BlackLine demonstrated its encryption procedures and overall data security measures for safe off-premise data storage. “Our IT people were involved very early on with a very extensive review of those security measures and came away satisfied,” Withrow says. “The way BlackLine rolls out new versions and addresses potential security breaches became clear selling points.”
The software’s auto-certification functionality in the Account Reconciliations module was appealing to Dow because it offered an out-of-the-box configuration similar to the rule sets and policies the business already had in place for many of its key accounts, albeit in a manual checklist. This meant that Dow could quickly automate its key accounts without having to spend a lot of time setting up new auto-certification rule sets.
“The fact that we didn’t have to make any process changes was one of the key efficiencies,” Withrow says. “Having well-defined policies in place, with rules already established for four different buckets of accounts, meant that when we rolled out BlackLine, we didn’t have to put in a more structured policy framework.”
Goals: Improve financial close and other key accounting processes to divert necessary resources to more value-added projects; and lessen reliance on error-prone manual processes
Strategy: Implemented the Account Reconciliations and Variance Analysis modules of BlackLine’s cloud-based Financial Close Suite for SAP Solutions, using the BlackLine SAP Connector to extract data
Outcome: Significant savings in time and resources spent reconciling 250,000 accounts; auto-certification of more than 50% of key accounts and 60% of overall accounts; and standardization of account reconciliations with a 24/7 centralized database view of account status