A couple years after the SAP ERP rollout, Timken decided to further innovate in accounting and finance. The company implemented BlackLine solutions in the cloud to integrate with its SAP and non-SAP ERP systems and make life easier for its accounting, consolidation, and audit teams. These teams handle roughly 50 company codes in the global SAP instance, where about 80% of the organization’s sales are transacted, according to Dan Welcheck, Jr., Principal - Global Finance Systems Group at Timken.
Welcheck is part of a small team that handles systems administration for the company’s SAP, BlackLine, and other financial applications (such as applications for consolidation and leasing), and that works closely with the accounting, consolidation, financial reporting, and auditing teams.
When the company first started its journey with BlackLine solutions, it was looking for an automated system with tracking capabilities to eliminate manual and redundant effort and create efficiencies. “Previously, we used spreadsheets for the account reconciliations that would then get printed out and manually signed off, and someone would have a huge folder with tons of paper to file away,” Welcheck says. “Headquarters also didn’t have access to the reconciliations of the different business units, so we were looking for better visibility for corporate and increased trackability.”
Having manual processes in place, a lack of standardization across the company, and a robust acquisitions strategy meant it was not easy for accounting and finance to keep up and scale. These challenges coupled with the desire for innovation and aspirations around resiliency and efficient audits made BlackLine solutions a good fit, according to Welcheck, because BlackLine closely integrates with SAP software and handles non-SAP data.
An Agile Strategy to Support Acquisitions
Timken deployed the BlackLine functionality using the same phased approach it used to roll out SAP ERP across its global locations — in phases, starting with the global headquarters in North Canton, Ohio, and followed by Europe, Asia, Latin America, and so on. As new businesses came on board, they were rolled onto the SAP and Black- Line technologies as needed.
“We have a couple of non-SAP ledger systems that we have been loading into BlackLine that have not yet been converted to SAP ERP, but the majority of BlackLine rollouts were based on the SAP units,” Welcheck says. “We continue to work with the new units as they are acquired and with some of the other smaller units on one-off projects to roll out BlackLine functionality in the interim until they get onto SAP ERP.”
There are a lot of considerations around integrating new acquisitions as they come on board. For example, the audit team has its processes to complete and accounts to reconcile and each unit has to come onto the consolidation system to ensure accurate financial forecasting and reporting and integrate employee data into Timken’s SAP SuccessFactors solutions. But having the right technology in place enables the most seamless transition possible. And BlackLine solutions help provide confidence, visibility, and control for the record-to-report process, according to Welcheck.
A Modern Approach to Accounting Processes
So far, the capabilities that Timken has utilized from the BlackLine solutions include functionality for balance sheet account reconciliations, system- to-system reconciliation (which is reconciling data across numerous sources), and task management.
Timken has BlackLine users at both the local and corporate levels as well as shared services centers, meeting the needs of both group- and unit-specific stakeholders. “With BlackLine, the shared services team and the consolidation team can go in and view any of the consolidations,” Welcheck says. “While preparations may happen at the local level at individual units or at shared services, we have various levels of corporate and group-level review where managers can create or view dashboards to approve and ensure everything is done correctly.”
This visibility and the self-service capabilities help save time, avoid redundancy, embed best practices, and improve standardization — and because all the information is in the cloud, it is easily accessible to all users with the proper permissions. Timken takes advantage of several of the BlackLine-provided, out-of-the box templates for accruals, amortizable items, and bank reconciliations, to name a few. The templates help ensure balances are appropriately substantiated based on the nature of the account. The auto-certification capabilities have also been helpful, according to Welcheck.
“Our application analysis showed that we have a high percentage of auto-certified reconciliations for accounts with no change in balance or zero balance,” he says. “For account reconciliations, we have about 9,100 active accounts, and we’re running a little over 50% auto- certification rate or not required in a given month.
And we have about 3,100 system-to-system reconciliations — most of which are local ledger balances that only require review if the local balance doesn’t match the US GAAP balance — and we’re running about 85%-90% auto-certification rate or not required in a given month.”
Enabling Audit Savings and a Virtual Close
In addition to seeing increased user satisfaction with the features BlackLine solutions offer, in particular with how they can carry over commentary and supporting data across multiple periods, knowing that everything is in place for so many units is a huge benefit, according to Welcheck. He adds that internal and external auditors have been granted BlackLine access. “The self-service capabilities have been helpful for auditors because now they don’t have to ask IT or accountants for help all the time,” he says.
“Both internal and external auditors can go in and view any reconciliations for the company codes they have access to, which has been a big-time saver for us. They can pull their sample directly and then follow up if they have questions pertaining to a specific reconciliation as it was reconciled. They can look back to whatever period they need to and see the account listing for a certain company code.” Another feature that Timken’s BlackLine users appreciate is that they can decide at what point in the review process auditors can access information.
This capability creates efficiency and helps eliminate version control issues. While Timken and its auditors used to spend much more time on audit preparation and execution, BlackLine now saves them effort and reduces costs due to fewer travel expenses, according to Welcheck. “Previously, auditors had to take up accountants’ time asking for them to pull 10 reconciliations — physically finding the paper and making copies.
From both an accounting and audit perspective, having one online repository where everyone can view the information has been a tremendous savings,” he says. “Before auditors had to spend money to travel to physical locations that weren’t local to our headquarters, now they are very happy they can pull all the data in BlackLine and follow up with an email if they have a question regarding specific reconciliations. That’s also been a money saver for the company.”
Global events forced Timken, like many other organizations, to have its non-essential employees, such as those in the finance department, work from home. With BlackLine, executing a close and corresponding audit with a distributed workforce did not pose any unnecessary issues. “It has been as smooth and seamless for us as it has been for the many years, we have used BlackLine,” Welcheck says.
“I can’t imagine how much pain there could have been over the last few months if we weren’t using an online solution like BlackLine to do account reconciliations and manage the close. It has allowed us to go through our audits and closes without missing a beat. Aside from having to schedule some virtual check-ins periodically, it has been relatively seamless to work through the process during the pan- demic, so it’s mostly been business as usual for us.”
With BlackLine providing the foundation, Timken has improved its accounting processes, saved auditing costs, and enabled a smooth virtual close. And the company is not stopping there — it knows how much more it can do and has already recognized many other use cases for automation with solutions from BlackLine. Visit https://www.blackline.com for more information.