Q: What are the benefits of taking time to clear open items instead of letting them accumulate?
Michael Gilmartin (MG): There are several benefits to regularly clearing items using open-item functionality. Here is a list of just a few of these benefits:
- By clearing open items regularly, you make it easier to analyze a general ledger (GL) account and to understand what is truly outstanding in that account. It provides greater clarity and visibility.
- Reconciliation becomes a much easier task when accounts are cleared properly.
- Reducing the amount of open items can result in better performance for reporting and screen loads as there could be less data to process.
- Revaluations may run faster with fewer open items to revalue.
- Upgrades and migrations can become easier with less data to migrate.
These opportunities are sometimes missed because there is simply too much data to be manually cleared. In those situations, an automated clearing solution can be useful.
Q: Are there basic rules for clearing open items?
Stephen Wolfman (SW): The fundamental rules for matching and clearing open-item managed transactions are to match the company code, GL account of the transaction, transaction currency, transaction amount, and fiscal year of the transaction identifier (from the line item description).
Once these transactions are identified as matching and selected to be cleared, the appropriate journal documents will be posted to the accounts, and any offsetting journal documents (for currency exchanges, etc.) will be posted to the offset accounts set up in open-item management.
Q: Can multiple line items be selected or uploaded for clearing instead of having to manually input each document number?
SW: Within the SAP system, users can select multiple lines for clearing. The BlackLine SAP Connector, however, provides an automation layer on top of the manual input in the SAP system for clearing open-item managed transactions. Users then receive a list of matched transaction identifiers they can use to clear the transactions automatically.
Q: How does the solution compare to standard SAP clearing functionality?
MG: The SAP system does have some automated clearing capabilities. But the BlackLine SAP Connector provides some additional useful features:
- It is end-user driven and configured. This means that accountants and other business users can maintain clearing rules without having to wait for IT to configure them.
- The matching logic can be very robust and flexible. Some examples of matching logic that the connector provides include matching within a threshold or date range, many-to-many and many-to-one matching, matching on characters within a field, and the ability to review suggested matches.
- The connector’s matching and clearing functionality is integrated with BlackLine Account Reconciliations and BlackLine Journal Entry. This means that unmatched items can automatically flow into reconciliations while matched items can be sent back to the SAP system for clearing. Rules can also be configured to analyze matched and unmatched data and create journal entries.
Q: How flexible is the BlackLine functionality for setting up matching and clearing rules?
SW: Using BlackLine Transaction Matching with the BlackLine SAP Connector can provide a lot of flexibility when setting up pass rules for matching transactions. There can be a number of pass rules configured that each compare a number of data points on a transaction, including the configuration of the data points to include functions such as absolute value, inverse value, rounding, value thresholds, and text splitting.
Pass rules can be set up to provide automatic or suggested matches that require confirmation. The pass rule that generated a given match is also recorded for review, along with any variances in a match if a threshold has been specified. Manual matching can also be performed. The results of the transaction matching process can also be routed into Account Reconciliations or Journal Entry if required.
Q: Are standard transaction codes (t-codes) used to post the clearing transactions?
SW: The automation layer provided by the BlackLine SAP Connector is built on top of the SAP functions and modules that would be regularly used in the SAP system to clear and subsequently post the transactions manually. Therefore, it uses the same underlying processes that would be used via the t-codes.
Q: What type of general ledger accounts should be set as open-item managed?
MG: Generally speaking, any accounts that have offsetting entries can and should be open-item managed. This typically represents a large portion of the chart of accounts. Examples include payables, receivables, prepaid, accruals, suspense, clearing, etc. Every transaction is eventually going to be offset by one or more subsequent transactions. Even a prepaid account, though it may take a year, will eventually fully amortize and could be cleared. Accounts that generally do not work this way are cash accounts and equity accounts. There are always exceptions, and the activity of each account should be reviewed to make a true determination about the appropriateness of open-item management.
Q: Should accounts with accruals and auto reversals be created as open-item managed?
MG: Auto-reversing entries are also cleared automatically, so there shouldn’t be additional work there. When using a solution like the BlackLine SAP Connector to automate the clearing process, open-item management can be used without concern for creating additional work. BlackLine Transaction Matching can also be used even when the account is not open-item managed.