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The Universal Journal and Journal Entry Functionality in SAP Account Reconciliation and Automation by BlackLine Explained

Elizabeth Milne, Accounting and Financial Close Expert, SAP

Molly Boyle, SAP Solutions Expert, BlackLine

In a previous blog, we talked about the benefits of the Universal Journal – the architecture of SAP S/4HANA. In that post, we focused how the Universal Journal eliminates certain intra-ERP reconciliations that were previously needed in legacy SAP environments like SAP ECC. Let’s expand upon that discussion and address the Universal Journal as it relates to journal entry management. Specifically, let’s break down what this means for the journal entry functionality offered by SAP Account Reconciliation and Automation by BlackLine.

Isn’t It Ironic? The Universal Journal Doesn’t Prepare Journal Entries

While SAP S/4HANA comes with basic capabilities for journal entries, many wonder what value SAP Account Reconciliation and Automation by BlackLine add to an SAP ERP?

As discussed in our earlier blog post, the Universal Journal is a simplification of the table structure within SAP’s ERP system. Now, rather than multiple tables that need to be reconciled to one another, SAP S/4HANA delivers one Universal Journal that stores all your data.

While the benefits of the simplified design are immense, the Universal Journal itself does not prepare or process transactions prior to posting. Further, it doesn’t eliminate the need to record, support, and approve manual journal entries.

Technology Can Only Automate So Much

It would be wonderful if SAP S/4HANA could automate everything. But the concept of a truly lights out financial close is not likely to exist. Can new technologies like predictive analytics and machine learning transform the way finance works? Sure. Can certain journal entries be automated by the SAP ERP? Absolutely. But accounting professionals are still critical to accuracy and compliance.

Among complexities, the nature of accrual-based accounting – a core principle of US GAAP, IFRS, and other accounting standards – necessitates companies to recognize revenues and expenses when they’re earned to derive a true and fair picture of the financial statements. Even the most sophisticated ERP is not capable of capturing all business transactions properly without needing adjustments for compliance and reporting.

Making the Most of Your Manual Entries

When journal entries are needed, organizations running SAP have several options for managing the process. Can entries be posted directly in SAP? Of course. Does SAP offer standard workflow for manual journal entries? Also, yes. SAP ECC customers have Park and Post functionality with workflow routing to approvers and adding supporting documents. In SAP S/4HANA customers have additional functionality such as upload from spreadsheet and the ability to verify Journal Entries with workflow.

The question, then, is “what does SAP Account Reconciliation and Automation by BlackLine bring to the table and why would I need an additional solution if I can post journals in SAP and I already have SAP S/4HANA?”

The answer is SAP Account Reconciliation and Automation by BlackLine brings extended functionality to the SAP ERP by adding automation opportunities, business-managed intelligent workflow, a complete audit trail, and integration with related month-end processes like balance sheet substantiation.

Like ending balances, journal entries are often a focus area for auditors. Document type and other fields within SAP are useful for narrowing down the population of journal entries. However, SAP Account Reconciliation and Automation by BlackLine can easily isolate the full population of manual entries with related substantiation and approvals built-in adds value and simplifies the audit process.

Standardization Across Multiple ERPs

Another benefit to having the journal entry functionality is SAP Account Reconciliation and Automation by BlackLine is process standardization. Many organizations don’t yet have the luxury of a single instance of SAP S/4HANA. This means journal entries are likely posted in many disparate source systems. The processes and controls around preparation, review, and substantiation are difficult to standardize in a heterogeneous environment. SAP Account Reconciliation and Automation by BlackLine makes it easy by allowing all manual journal entries to originate in its cloud platform.

Journal entry fields for each ERP are built into the solution and approved, substantiated entries are then posted directly to the local systems through secure connectors. Real-time feedback and validation are also available, and as the ERP landscape evolves, updates can be made quickly in SAP Account Reconciliation and Automation by BlackLine – little to no IT time needed.

An End-to-End Solution

With SAP S/4HANA, companies get a world-class ERP platform and an opportunity to simplify finance master data with the Universal Journal. With SAP Account Reconciliation and Automation by BlackLine, customers get an additional opportunity to improve the month-end close.

A Blog Series to Answer Your Questions

There are a number of common questions about BlackLine and SAP and how our solutions work together. Please check out these blogs to answer them:

 

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