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M&A Booster: Modern Accounting

Why merging IT systems is so important in mergers and how a digital accounting process can help.
Ralph Weiss, Blackline
August 1, 2022
This text has been automatically translated from German to English.

Although the World Economic Summit in Davos has triggered a rethink with regard to unlimited economic growth, corporate takeovers will certainly remain the order of the day for a long time to come. Mergers are not infrequently forced in order to counteract stagnating corporate growth, to expand market positions or to extend the portfolio. But what sounds convincing in theory proves to be quite challenging in implementation. If you want to keep the challenges of a merger and acquisition (M&A) project as controlled and efficient as possible, you should pay attention to the integration of accounting processes.

The financial department is where the threads from all areas of the company come together, which is why the merger-related changes have a particularly strong impact here. Very important in M&A processes is the integration of the various systems, for example ERP and accounting systems. Although the digitization of finance and accounting (F&A) is already being driven forward by many companies, gaps still exist in core processes, such as the Record2Report process, so that data has to be exchanged manually or with a special work-around. This is already problematic under normal circumstances, but quickly becomes a challenge in the context of an acquisition.

Modern Accounting: Daring the Change

Automation solutions can be of decisive help at this point. They bring together the data of both companies in an integrated cloud platform, for example from BlackLine, and thus improve the consistency of the processes. This creates uniform and central processes - so-called modern accounting - so that an acquired company can be integrated quickly and securely. Modern Accounting means the greatest possible automation of manual processes, standardization and the creation of maximum transparency, so that accurate data is available without restriction and in real time. This change enables companies to make and implement secure decisions.

The move from traditional accounting to modern accounting is accompanied by a paradigm shift. This entails the use of modern software solutions that make the redesign of processes possible in the first place through forms of machine learning and automation. The seamless integration of financial and ERP systems, such as SAP, is particularly important. BlackLine closes these gaps and automates the previously time-consuming and manual processes that many finance departments still have to deal with on a daily basis under high time pressure in the financial closing process. The consistency and visibility gained in this way is the basis for another important evolutionary step in F&A: continuous accounting. In this process, tasks that are usually only carried out at the end of a reporting period are distributed over the entire period - and processed as they arise. The advantage: CFOs, controllers or the finance team can provide management with accurate figures, analyses and forecasts at any time.

Benefit from added values in the short and long term

In the event of a merger or acquisition, continuous accounting can make all the difference. Especially in the case of a merger, it is important to have transparency about risks at an early stage. Automated processes facilitate and accelerate the integration of business units. In the financial area, data from various applications, such as from different ERP systems, sub-ledgers, tax applications, treasury solutions, personnel accounting and external banking systems, must be merged during a company merger. Therefore, ERP-agnostic integration is essential. The BlackLine Financial Management solution supports a variety of out-of-the-box connectors to SAP and APIs to third-party systems to integrate summary and detail data; over 3,000 companies have already implemented these data and process integration benefits. Since the primary goal of a merger is to strengthen a company's own business or to expand its market position or product diversity, the positive side effect in terms of process modernization should not be ignored, but the opportunities should be seized early on. Thanks to a high degree of automation, processes can be harmonized end-to-end. More transparency is created and the integration of the companies is accelerated.
Ralph Weiss, Blackline

Ralph Weiss is Geo Vice President DACH at BlackLine.

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