The Power of Process Integration: Combining Account Recs, Matching & Journals

Many accounting teams begin with BlackLine by implementing Account Reconciliations. But not every new customer realizes how Transaction Matching and Journal Entry add muscle—and efficiency—to the entire reconciliation process.

So says Katie Morris, product marketing manager at BlackLine.

“No matter what the industry, companies that follow Generally Accepted Accounting Principles (GAAP), or accrual-basis accounting, are going to have to book journal entries as part of the reconciliation process during period-end,” she says.

But she notes that there’s plenty of pressure during the close cycle. There’s time pressure, the need for maximum accuracy, and the inevitable growth in data sources and data volumes.

This is where Transaction Matching and Journal Entry come in.

Most accountants have experienced the manual process of ticking and tying transactions between data sources to reconcile an account. Credit cards, bank accounts, payroll, and inventory are examples of processes that may require manipulating high volumes of data.

Take bank accounts, where bank fees and in-transit items often trigger anomalies in the reconciliation process.

“With a bank reconciliation, you’re pulling data from the bank and trying to match that with data from the general ledger,” Morris says. “But often they don’t match.

“Bank fees have to be taken into consideration, and there are items in transit. Either of these may show up in the bank data or in your general ledger, but not both.”

Adding BlackLine’s integrated Transaction Matching engine to Account Reconciliations significantly decreases the time spent managing this data. BlackLine’s user-defined matching rules guide the engine to automatically make correct matches, letting users spend their time focusing on the exceptions.

“The key with Transaction Matching is that it runs in the background while you perform other close activities,” she says. “That way, when you pull up your bank reconciliation, the manual work, or matching of transactions, has already been done.”

With BlackLine, journal entries identified during the reconciliation process can be posted directly into the ERP system. There’s no need for keying manual data or performing work in disparate systems, so the risk of inaccurate or untimely entries decreases.

As an example, Morris points to the process for reconciling prepaid items, such as rent. She notes that prepaid rent or insurance can be amortized over 12 months, and many companies have hundreds of prepaids, for facilities, equipment, and so on.

Booking these types of entries manually means performing some type of calculation in spreadsheets, preparing the journal entry, getting appropriate sign-offs, then going back to the ERP system to post, and doing that 12 times a year.

“As you can imagine, there’s lots of room for error,” she says. “That’s because there’s no version control, and you’ve got multiple people performing these different functions in Excel and other systems.

Automating these processes—reconciliations, transaction matching, and journals—creates a practical and powerful first step in the move to modern accounting.

“There will always be pressure when closing the books,” Morris says. “But companies are now realizing that with an integrated accounting platform like BlackLine, automation solutions can be proactively applied throughout the month—and the year. By the time the close comes around, much of the work that can be done beforehand is already finished.

“Integrated processes like these go a long way to make that happen.”

Read our new issue of BlackLine Quarterly for more stories like this, including the keys to successfully achieving internal transformation.