Increasing Real-Time Visibility in the Close Process
Every second, more than $2,100 worth of items are sold on eBay, accounting for nearly $70 billion in transactions generated each year. eBay’s position as a global commerce giant is fortified by another roughly $100 billion in commerce enabled by its other brands, such as eBay enterprise, PayPal, Bill Me Later, and StubHub. eBay has more than 100 legal entities around the world, including multiple entities in many countries of operation, and the corporation must reconcile hundreds of balance sheet accounts for each of them.
With a few exceptions, eBay strives for a single instance of SAP ERP for global visibility into its financial picture. However, an intricate system of accounts complicated its month-end financial close resulting in a process that could take up to 10 days. A major reason for this extended cycle was that the company relied on a mostly manual, paper based account reconciliation system. Tom Hoover, senior manager of finance systems, at eBay, recalls a lot of running around by everyone in accounting. “Because of the nature of our business, we often get requests for documentation that goes back several years,” It was very labor-intensive.” When supporting documentation was required for several different legal entities, it set off rounds of phone calls and emails to track down and file the necessary paperwork. Language barriers, time differences, and planned or unplanned days off all contributed to potential hold-ups. A 24-hour lag time was built into the financial close cycle to account for these inefficiencies, but couldn’t prevent some open-ended accounts due mainly to the sheer number of accounting teams across the globe.
“There were lots of logistics to consider just in getting the information,” Hoover says. “It was especially difficult for the controllers who had to sign off on the accounts without having all the information centralized in one place.” This, in turn, made finalizing manual month-end checklists a very reactive process. eBay’s consistent growth made this manual-based system untenable. Just shy of 20 years after founder Pierre Omidyar opened eBay’s doors by auctioning a broken laser printer for $14.83 the organization had more than 10,000 accounts to reconcile each month, with roughly 1,600 of those identified as key for auditing purposes. “We were reaching a tipping point where we knew we needed to modernize and start thinking smarter,” says Hoover.