Improving intercompany accounting through process and

technology design featuring BlackLine and SAP®

Katie Glynn, Senior Manager, Deloitte & Touche LLP – BlackLine alliance technical specialist
Molly Boyle, Director SAP Solutions, BlackLine
Stephanie Hudson Miller, Vice President, S/4HANA Finance COE, SAP North America
 Today’s Speakers

Katie Glynn Molly Boyle Stephanie Hudson Miller

Senior Manager Director, SAP Solutions Vice President, S/4HANA Finance COE
Deloitte & Touche LLP BlackLine Systems, Inc. SAP North America
kaglynn@deloitte.com Molly.boyle@blackline.com Stephanie.miller@sap.com

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AGENDA

1 Transforming and modernizing intercompany 3 Creating a roadmap for achieving

accounting technology in 2021 intercompany accounting transformation

2 Key components of cloud-based intercompany

automation solutions - SAP Intercompany
Financial Hub by BlackLine (ICFH)

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Creating a framework for intercompany accounting technology improvement
When designing an intercompany transformation, Deloitte recommends the use of an integrated intercompany
accounting framework that is divided into seven components representing the relevant accounting, treasury,
tax, legal, and business considerations associated with intercompany transactions.
Intercompany
Accounting Framework
Governance and policies Intercompany pricing
Global policy with materiality enforced; mix of Clearly defined pricing methodology with
preventative and detective controls traceable components

Internal and external reporting Data management

Clear ownership of intercompany master data;
Standard KPI monitoring, dashboard reporting,
standard data definitions and coding across
and drill-down to transactions
systems

Reconciliation and elimination Transaction management

Automated invoicing and workflow approval
Automated transaction-level matching,
streamlines processing and reduces errors /
reconciliation, and elimination
exceptions

Netting and settlement

Automated, dynamic settlement and
clearing; efficient cash management

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Reviewing the end-to-end intercompany accounting process (not just reconciliation)
The intercompany process doesn’t start on Day +0. It begins with upfront agreement on transactions and
dual-sided bookings minimizing the need for reconciliation.

Current Immense data Volumes and complexity Insufficient automation Diverse systems and processes
State Multi-currency and tax High volume of rebills and Globally-dispersed entities
treatments Out of synch timing of entries
corrections

Desired Future State

Preparation and Record Reconciliation Netting/Settlement Consolidation and Elimination

Initiation & Financial Tax

IC Policies & Documentation Prepare
Upfront Book IC Netting/ Match and Consolidation Reporting
Data Matching and Elimination
Agreement on Transactions Settlement Clear and and
Governance substantiation Entries
IC Transactions Reporting Compliance

Manage and
Resolve IC
Disputes

Mitigation and
Correction
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Creating end-to-end intercompany accounting & governance
SAP Intercompany Financial Hub by BlackLine (ICFH)
Cons olidation,
Source Da ta & Agreement, Preparation & Re conciliation & Subs tantiation & Ne tting & Elimination &
Trans actions Re cording Ma tching Attes tation Se ttlement Re porting
Trade Trans actions

Balance-
ICMR level Group
Auto- Re porting
certification

Netting Settlement
Trans actions
Non-Trade

Automated
reconciliation

Policies , procedures , audit trails , s upporting documentation, review

comments , automated workflow, BEPS and other reporting & KPIs

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Considerations for intercompany technology design
When setting up intercompany technology, it is important to consider a variety of scenarios which could
impact design, configuration, and ultimately end-use of the solution

1 2 3
Compliant global reporting to
Non-trade intercompany
Multi-ERP environment support tax and statutory
processing
reporting

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1) Multi-ERP Intercompany Environments
Organizations should consider how to provide continuous, preventive processing across ERPs for Intercompany
Tra ns action Initiation Tra ns action Re conciliation Proa ctive Adjus tments & Approvals

Reconciling differences
addres s ed

IC Purchas e Orders
IC Sales Orders

Autom ated, Temporary Permanent

intelligent & Adjus tment Adjus tment All Local
Trading partner continuous ERPs Updated
balances m atching
with
& s ubledger detail
proactive
difference
res olution
Imbalances reported
Accrual reviewed J ournal Entries /
& approved AR/ AP invoices

Reconciliation with
open items

Policies , procedures , audit trails , s upporting documentation, review

comments , automated workflow, reporting & KPI tracking acros s SAP and
non-SAP data s ources
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© 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ
2) Non-Trade Transactions
Organizations should ensure they understand non-trade transaction processing when reviewing technology

Tra ns action Cre ation Workflow & Ce rtification Pos tings & Outputs

Intercom pany Mas ter

autom atically initiates
trans action creation Trans action GL / AP / AR entries
Pre pare d automatically pos ted to SAP
Cos t details & drivers and non-SAP ERP(s )
autom atically interfaced from • Trans fer Pricing
s ource s ys tem s (ERPs , etc.) Rules Applied
• Taxes Determined Trans action Certified
& Calculated (auto or m anual approval)
Trans fer Pricing rules
preconfigured by entity & • Supporting
trans action type docum entation attached
Invoices
Created

Automated Logic

SAP Intercompany Financial Hub flexibly and s ecurely connects to any

SAP or non-SAP data s ource via certified connectors , APIs , and other
integration options . This facilitates s eamles s ly pos ting and mas ter data
validation.

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© 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ
 3) Compliant global reporting to support tax / statutory requirements
Organizations should collaborate with their Tax and Statutory accounting teams to ensure alignment and
awareness for intercompany-related considerations.

Statutory Intercompany Tax

accounting
(Balance level auto-
certification)

Related considerations
M&A activity Business model changes IPO readiness
Multi-currency environments Global regulatory requirements

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Marketplace examples
SCENERIO 1
ICFH is implemented before
other BlackLine modules
• Early-stage SAP S/4
implementation in flight but not
current BlackLine Account
reconciliation users
• Implemented ICFH to
specifically address immediate
intercompany challenges
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SCENERIO 2
Blackline ICFH is
implemented during CFIN
• CFIN implementation in-flight
• Concurrently implemented ICFH
functionality:
• Non-trade intercompany
transaction creation and
workflow
• Global balancing process
to enable automated
transaction level
matching and
reconciliation
SCENERIO 3
BlackLine ICFH is implemented
during SAP S/4HANA transformation
• S/4HANA transformation in-flight
• Concurrently implemented ICFH
functionality:
• Non-trade intercompany
transaction creation and workflow
• Global balancing process to enable
automated transaction level
matching, reconciliation,
eliminations and netting
• Centralized intercompany
agreements
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Next steps : Intercompany technology transformation roadmap
Define the future ICA process deep dive
state vision Deep dive into your current ICA processes and
Align with the vision of transaction-level detail to assess in terms of ERPs,
the organization transaction types, legal entities, and trading relationships

Technology
Intercompany implementation
accounting Pilot and global
planning rollout
Gather pain
points, identify
key stakeholders,
and get buy-in
from cross-
functional
leadership to “get
the ball rolling”

Conduct an intercompany
maturity assessment Foundational readiness Develop
Identify gaps between Clean up and get the implementation
current state assessment and foundation ready while roadmap
future state vision in order to beginning to evaluate with Capture high-level
achieve desired outcome. enabling technologies activities and project
milestones

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This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting,
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