Making Sense of Transaction Matching: How SAP Financial Close Solutions by BlackLine Enhance SAP Innovations

In this blog, we’ll discuss scenarios involving matching and reconciling high volumes of transactions and highlight how SAP Financial Close Solutions by BlackLine complement and extend other SAP solutions.

Balance sheet substantiation, manual journal entries, and task management tend to get a lot of attention when it comes to the month-end close. One challenge not as commonly discussed is the substantiation of high volumes of transactions. Specifically, how balances in certain general ledger accounts are made up of hundreds of thousands of individual line items that must be reconciled against other data sources to be substantiated. Noted in an earlier SAP blog "Understanding the Many Applications of Reconciliation" many non-accountants will equate “account reconciliation” with “transaction matching.” There’s some serious semantics going on here, so note the nuances.

Despite the other critical tasks on their plate, accountants often spend a significant amount of time downloading data from disparate sources, aggregating millions of rows of detail in spreadsheets, and attempting to reconcile items using complex formulas, v-lookups, or color coding (often called rainbow spreadsheets), and other error-prone processes to identify errors, exceptions, or reconciling (unmatched) items that require follow-ups or adjusting entries. This is the challenge of transaction matching.

SAP ERPs and SAP Financial Close Solutions by BlackLine have functionalities to automate and de-risk the traditionally manual methodologies. Let’s explore them.

As discussed in an earlier SAP blog, one of the benefits of SAP S/4HANA’s Universal Journal architecture is its elimination of some basic reconciliation, or matching, scenarios like reconciling sub ledger details to the general ledger. For those organizations not yet running SAP S/4HANA, SAP ECC offers standard reports to help facilitate the reconciliation of data within the ERP. Subsequent steps, which are typically manual, are then required to identify errors or make adjustments.

Beyond standard sub ledger to GL reconciliations, SAP has robust transaction matching capabilities for some specific and complex use cases. First, using machine learning capabilities, SAP Cash Application solution learns from accountants’ past manual actions to apply payments to open invoices.

This intelligent receivable matching helps companies  lower days sales outstanding and free accountants from manual work. In addition, SAP Goods and Invoice Receipt Reconciliation provides transaction matching functionality to optimize and clarify the SAP open items derived from the purchasing process.

While the ERP is the system of record and the general ledger and related sub ledgers contain important financial data, critical information for reconciliation and substantiation lives outside the ERP. Other data sources might include bank detail, point-of-sale systems, credit card detail, payroll or HR systems and more. And disparate ERP landscapes pose additional reconciliation challenges.

To extend SAP’s intra-ERP functionality, SAP Financial Close Solutions by BlackLine have robust, flexible transaction matching that support a variety of use cases and allow for reconciliation of information from any data source – including those outside of SAP. These solutions can handle robust logic, complex data relationships (e.g. one-to-many and many-to-many), and fields outside the ERP.

The transaction matching functionality in SAP Financial Close Solutions by BlackLine is flexible, business owned, and fully integrated with other processes such as balance sheet substantiation and journal entry management. When needed, users can easily create reconciling items within an account reconciliation or create an adjusting journal entry for posting, allowing for end-to-end automation and auditability across a variety of business processes.

With the advanced rules-engine provided by SAP Financial Close Solutions by BlackLine, organizations have matched millions of transactions in seconds or minutes. The solutions identify exceptions and suggest matches, which help focus accountants’ attention on potential risks and adjustments, freeing them up from the manual “rainbow spreadsheets” to which they’re often accustomed. Adjusting journal entries and clearing documents can also be automated and posted directly to SAP and non-SAP ERPs, and reconciling items are automatically incorporated into the balance sheet substantiation process.

Learn more about SAP Financial Close Solutions by BlackLine.