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Global Visibility into Account Reconciliations

Every second, more than $2,100 worth of items are sold on eBay, accounting for nearly $70 billion in transactions generated each year. eBay, Inc.’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.

The Challenge

For eBay, facilitating such an extraordinarily high volume of commerce creates a whirlwind of financial dealings with vendors, merchants, and advertisers. 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—with employees repeatedly tracking down supporting documents in three-ring binders, making copies, and then refiling.

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,” he says. “So, our people in accounting would have to go to offsite storage centers to hunt down the documents. 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.

Why BlackLine

After a discovery phase where eBay identified several inefficiencies in its global financial close processes, the business sought a vendor that could help with the modernization effort. That search quickly identified BlackLine as the best option to deliver the accounting functionality needed. eBay chose BlackLine in part because of its seamless integration with SAP ERP Financials, and implemented the Journal Entry, Task Management, and Account Reconciliations modules, going live with all three simultaneously with little to no customization. Upon implementation, BlackLine was processing approximately 10,000 account reconciliations, 17,000 journal entries, and what had been 7,000 manual-based tasks.

Though the implementation was virtually hassle-free, an early and expected challenge was bringing the hundreds of eBay employees who would be using the new technology up to speed with how it works and interfaces with SAP ERP. To aid with training, as well as to create a traceable audit trail, eBay used BlackLine functionality to designate specific users as either system or local administrators. eBay then trained the administrators in its various legal entities around the world, who in turn trained their direct reports.

This training, according to Hoover, was considerably easy. “I administer multiple financial systems, and by far, the fewest number of questions I receive involve BlackLine,” he says. eBay also made good use of video and web-based training through BlackLine U.

The Results

Prior to migrating platforms, eBay had taken steps to transfer and consolidate the accounting operations for its repeatable, non-critical reconciliations to a single shared services center in India. While centralizing these accounting functions created efficiencies, there was some sense of controllers losing a bit of visibility into their local accounts. This became a non-issue when eBay transitioned to BlackLine’s cloud model. “It was a seamless move for us because we didn’t lose any of the visibility; it was just being done somewhere else. And with BlackLine’s on-demand, web-based system, we had visibility into it all the way through the entire process,” Hoover says.

With key reconciliations processed in one of three major regions serving its legal entities—Europe, Asia, and North America—the multi-language and multi-currency functionality within BlackLine were important as well. Throughout the transition, eBay had local administrators on-hand in each of these regions and India, but in the end, there was constant global visibility through the BlackLine system.

This improved visibility from having an always up-to-date snapshot of account reconciliations or tasks enables a larger benefit: better organization of financial processes at the enterprise level. According to Hoover, employees are benefiting by something as simple as now being able to check on progress by logging into the BlackLine system from home.

In a nutshell, the new landscape means much less running around. “As far as reconciliations and accounting functions were concerned, BlackLine took care of that in one stop. It was palpable,” Hoover says. “I sit next to the accounting department, and it was easy to get a sense of the efficiencies gained with BlackLine.”

eBay’s financial close cycle is now three days, which allows auditors and tax preparers to begin and complete their tasks in a shortened window because incomplete reconciliations are nonexistent. The business has streamlined its auditing processes with the auditor self-service capability in the BlackLine system, whereby eBay can assign permission to auditors to log into the system directly.

With up to roughly 40 active audit accounts inside of BlackLine at a time, the increased visibility into account reconciliations allows those auditors to find what they need without having to rely on eBay’s dedicated resources. This holds true for Sarbanes-Oxley (SOX) compliance as well. In the past, eBay had to set aside resources to work with SOX compliance teams to ensure the needed reconciliations were complete. Today, an interface proactively sends over a list of the reconciled accounts directly to those SOX teams based on rules and alerts set up by administrators in the BlackLine system.