For a company with ambitions to grow on a global scale while increasing market penetration in North America, financial operations have to be smooth and reliable. But after years of expansion, Hershey found its systems and processes, which tracked approximately 4,000 general ledgers across one chart of accounts, required a lot of work to get the insight it needed.
Reconciliation of accounts was particularly problematic, with 4,104 active account reconciliations, prepared by 121 people, and 77 people approving them—all with varying styles, formats, and deadlines. Data was kept in spreadsheets, on paper, and in emails, and was stored in shared drives, local computers, and file cabinets rather than in a central repository.
It was clear that Hershey needed a different approach to account reconciliation. “As a global organization, having visibility to the entire balance sheet is a need,” says John Zimmerman, director of financial data systems at Hershey for the last nine years. “The more global we became, the more oversight we needed into the chart of accounts. We were looking for process efficiency around balance sheet control, preparation, and reconciliation.”
The team researched a number of approaches, including a homegrown application that called for employees to attach reconciliations via a spreadsheet. This homegrown approach provided some oversight of approvals and a central repository for reconciliations.
However, a pilot program in Canada quickly showed that it would be unsustainable for dealing with more than 40 company codes. The team had to find another option—a transformational solution that was not myopically attached to the current financial processes.
Because Hershey is also doing a global rollout of SAP S/4HANA Finance via a central finance deployment, the solution needed to integrate with the company’s SAP ERP system. For example, Hershey does manual journal entries, and since there was no fix for mass journal entry processing, the company needed a trusted SAP partner that could automate journal entry postings and approvals as well as provide better account reconciliation and an efficient mass global close.
Zimmerman wanted a simple solution with functionality that the team could roll out at its leisure, rather than as part of a big-bang implementation.
A request for proposals (RFP) went out to vendors.
A few companies responded to the RFP, and SAP partner BlackLine, a cloud software provider, rose to the forefront.
Early in 2017, Hershey decided to implement five BlackLine products in a staged approach: Account Reconciliations, Task Management, Consolidation Integrity Manager, Journal Entry, and Transaction Matching. It began a training program for employees to facilitate quick user adoption.
At the same time, it worked with BlackLine to establish the connectors between the SAP and BlackLine systems and to define the necessary information to begin to pilot and use account reconciliation. “These products all have a similar set of functionality and syntax,” says Zimmerman. “When fully deployed, they will interconnect with each other and the SAP S/4HANA central finance deployment.”
Hershey first implemented Account Reconciliations, which provides online workflows to approve the accounts and auto-certification of zero-balance accounts and subledgers. It provides templates that standardize processes across the globe, including a bank template, a prepaid template, and an accrual template. Use of the templates for documentation of processes had a number of benefits, including risk mitigation.
“The Task Management product is basically a checklist of what you want to monitor,” Zimmerman says. Hershey’s aim was to shorten its close process, which takes four-and-a-half days to complete, with management review stretching it to day six. Then additional management reporting—for example, of brand profitability performance—follows.
The company did not want to lose that cycle as it moved to SAP S/4HANA, but it also wanted better sets of documentation and monitoring of the close process than the use of spreadsheets provided. This is why in October 2017, the company started to implement Task Management, which includes a repository for documentation with a checklist of tasks for executing and monitoring the close.
Consolidation Integrity Manager
The company also implemented Consolidation Integrity Manager. It allows the company to take its subsidiary business units’ trial balances and map and consolidate them into the SAP system. “This module does the consolidation, and the many-to-one relationship provides better visibility into the accounts of our subsidiaries,” Zimmerman says.
The Journal Entry product will eventually replace Hershey’s custom-developed programs for mass journal entry posting.
In terms of journal entry support and approvals, a lot of the process had been done through emails that were subsequently attached to the posted journal entry in the SAP system. BlackLine is an SAP partner for journal entry processing, and the product provides standardization and an efficient approval and posting process.
This solution gives flexibility to the clearing process, allowing easier matching than a more rigid setup in the SAP system. “The ability to match and clear open items is useful, and it will become more useful as organizations experience changes in the tax environment, specifically on the international side,” he says. “I expect these changes will lead to more sets of open item accounts that require matching.”