Automate Your Billing Accounting Cycle Using SubLedger Plus

Automate Your Billing Accounting Cycle
Using SubLedger Plus
Discussion Paper

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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com


Table of Contents

INTRODUCTION ...................................................................................... 3
BUSINESS AND ACCOUNTING CYCLE REVIEW ................................ 3
THE ISSUES ............................................................................................ 3
SOLUTION ............................................................................................... 4
HOW IT WORKS...................................................................................... 5
DAILY ACCOUNTING AND BILLING SYSTEM BALANCING .............. 7
DAILY CASH RECONCILIATION ........................................................... 8
DAILY UNAPPLIED PAYMENTS CLEARING ACCOUNT
RECONCILIATION................................................................................... 9
RECAP OF DAILY WORKFLOW .......................................................... 10
REPORT DISTRIBUTION ...................................................................... 11
CONCLUSION ....................................................................................... 11
A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
Introduction
Businesses that can close their general ledger fast and efficiently have
competitive advantages through reduced costs and better information. Our
solution is a streamlined accounting middleware process that connects
your billing systems to your general ledger and balances them daily. It
automates journal entries, reconciliations, analysis and reporting. It
Our solution is a
reduces costs, speeds the close, expands your analytical capacity and
streamlined accounting
tightens controls.
middleware process that
connects your billing
systems to your general
Business and Accounting Cycle Review
ledger and balances
them daily.
The focus of this whitepaper is the accounting and financial controls
associated with your revenue and billing cycle:

•
Recording revenues and establishing accounts receivable balances in
your general ledger.
•
Recording payments received from customers and decreasing
accounts receivable balances or establishing liabilities for unapplied
payments.
•
Balancing general ledger accounts receivable balances to your billing
systems.
•
Reconciling general ledger cash accounts to bank account balances.
•
Reconciling general ledger depository suspense accounts to billing
system unapplied cash suspense listings.
The Issues
Issue 1 End of Period Bottlenecks

Most accounting departments post journal entries and reconcile balances
at the end of the period. This lengthens the close and compresses the
time available to resolve issues and adequately analyze results.

Issue 2 Inefficient Reconciliation and Detailed Reporting Procedures

Many businesses reconcile general ledger accounts and create detailed
reports supporting these accounts using inefficient spreadsheet based
procedures.

Spreadsheets have several disadvantages:

•
They require manual, recurring tasks like sorting, matching, cutting,
pasting and formatting.
•
They are static. As late entries are posted to the general ledger the
spreadsheets need to be manually updated to stay reconciled to the
general ledger balances they support.
•
They are high risk. Spreadsheets lack input validation and edits and
the large number of steps increases the risk of error.
•
They are not scalable.
•
Reconciled data is siloed in separate spreadsheet files limiting your
capacity for data mining and ad-hoc reporting.
A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
Solution
Imagine if you could process transactions from your billing systems
straight through to the general ledger everyday and balance your general
ledger back to billing systems at a customer level. Instead of a single large
closing cycle at the end of the period you have a continuous stream of
miniature daily closes. You identify exceptions earlier and you have less to
do at the end of the period. You close your general ledger faster, and
because it’s automated, you have lower staffing requirements.

This is the BlackIron SubLedger Plus solution. It tightly couples your billing
systems to your general ledger, automates reconciliations and exception-
based workflow, and provides a consolidated and reconciled subsidiary
ledger for simplified reporting and analysis.

1. The starting point: a self-reconciling subsidiary ledger. The
Imagine if you could
starting point for dramatic productivity gain is an automated
process transactions
middleware solution that consolidates customer level billing data from
from your billing systems
multiple billing systems, performs roll forward validations, creates
straight through to the
journal entries and synchronizes itself with the general ledger. A
general ledger everyday
general ledger reconciled subsidiary ledger for automated
and balance your
reconciliations, detailed analytics and centralized reporting.
general ledger back to

billing systems at a
2. Leverage the subsidiary ledger with automated cash and
customer level.
suspense account reconciliations. Take full advantage of the
reconciled subsidiary ledger using integrated reconciliations that keep
your general ledger balanced to billing systems and reconciled to
bank account balances every day.

3. Resolve issues fast using the automated exception-based
workflow and the Accounting Workbench. Use the SubLedger
Plus Accounting Workbench to research and resolve exceptions fast.

4. Create great looking reports that always reconcile to your
general ledger. View reports from the SubLedger Plus Accounting
Workbench or schedule for automatic distribution.

A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
How It Works
High Level Process Flow


SubLedger Plus
balances your general
ledger accounts

receivable balances to
You can configure SubLedger Plus to perform these procedures daily,
billing system balances
weekly or at the end of the period. Best practices are to balance daily.
at a customer level and

identifies variances
•
SubLedger Plus imports customer level transactions and balances
resulting from roll
from your billing systems, assigns accounting and performs roll
forward variances and
forward validations. Roll forward validations ensure that opening billing
adjustments.
system balances plus new billings less applied payments roll forward
to new billing system balances. Roll forward variances cause
differences between your general ledger and your billing system.
These are routed to accountants at a customer level for review and
correction.

•
SubLedger Plus creates summary journal entries from imported
transactions and extracts to the general ledger.

•
The general ledger posts the journal entry and sends back a synch file
to SubLedger Plus. The synch file includes all current general ledger
account balances subject to reconciliations and the journal entries
posted to those accounts since the last synch. SubLedger Plus
confirms that its journal entries were posted, backfeeds journal entries
from other sources, and synchronizes its balances with the general
ledger.

•
SubLedger Plus balances your general ledger to your billing systems
at a customer level and identifies variances resulting from roll forward
variances and adjustments.
A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com

•
SubLedger Plus imports electronic bank statements conforming to the
standard BAI format and reconciles to general ledger cash balances.
Reconciling items are routed to accountants.

•
SubLedger Plus imports unapplied cash listings from your billings
systems and balances to general ledger reconciled inventories of
outstanding transactions in suspense accounts. Variances are routed
to accountants.

•
SubLedger Plus creates general ledger reconciled reports to support
and analyze billing operations.


Understanding the Subsidiary Ledger

SubLedger Plus operates like a customer level general ledger.
Transactions are imported at a customer level and assigned a debit and
credit account using accounting rules that you define. We refer to these as
subjournal lines. Subjournal lines are aggregated into summarized
journal entries and extracted to the general ledger.

Billing related journal entries posted directly to the general ledger (not
passing through SubLedger Plus) are backfed to SubLedger Plus as part
of the synchronization process. In this manner SubLedger Plus always
stays reconciled to the general ledger balances that it supports.
SubLedger Plus has an easy to use customer level adjustment utility with
integrated approval workflow so that you never have to post journal entries
directly to the general ledger.

SubLedger Plus
SubLedger Plus aggregates balance sheet account subjournal lines to
operates like a customer
maintain customer level inventories that support your general ledger
level general ledger.
balances. Customer level subledger balances are reconciled to imported
Transactions and other
billing system balances using roll forward variances and adjustments.
changes in balances are

imported at a customer

level and assigned a

debit and credit account
The Accounting Workbench
using accounting rules

that you define.
You use the Accounting Workbench to research exceptions and take
corrective actions:

•
A Start Page to review exceptions routed to you.
•
A robust query builder and report viewer for performing research.
•
Powerful utilities for creating adjustments, assigning accounting,
clearing reconciling items, reversing accounting, and adding notes.
•
Automated workflow that routes actions to managers for approval.


A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
Daily Accounting and Billing System Balancing
Now let’s walk through an example of a daily workflow configuration. On a
daily basis SubLedger Plus imports customer level transactions and
balances from your billing systems, performs roll forward validations,
creates journal entries and synchronizes its balances with the general
ledger. The SubLedger Plus customer level subledger supporting the
general ledger is balanced to imported billing system balances using roll
forward variances and adjustments.

All the procedures below are automated and require no work by
accountants except for the exception-based procedures in the
Accountant’s “swim lane”. The goal is to import quality data and design
effective rules so that exception-based procedures are minimal.

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A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
Daily Cash Reconciliation
SubLedger Plus is much more than a simple transactional matching
process. It maintains an inventory of items that reconcile your general
ledger cash account balances and your bank account balances using a
combination of roll forward validations, general ledger synchronization,
and transactional matching.

SubLedger Plus imports electronic bank statements conforming to the
standard BAI format, rolls its prior bank balances forward to new imported
bank balances, and matches bank transactions to unmatched cash
subjournal lines using automated rules that you define. SubLedger Plus
has a flexible and easy to use rule builder for creating powerful rules.

Any reconciling items not clearing in the normal course of business are
routed to accountants for research and correction.



A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
Daily Suspense Account Reconciliation
Payments received and not yet applied to customer balances sit in a
general ledger suspense account until applied. The balance in this account
should reconcile to unapplied cash listings from your billing systems.

SubLedger Plus maintains an inventory of outstanding transactions
supporting you general ledger suspense account using matching rules that
you define. These rules are used to match cash deposit subjournal line
credits to subjournal line debits from payments applied in the billing
system. One complicating factor is that lump sum payments may be
applied separately to different customer balances and applied at different
times. SubLedger Plus has an integrated splitting utility that allows you to
split subjournal lines, while still staying reconciled to the general ledger, to
facilitate partial matching.

You can also create rules to identify matching subjournal lines that either
don’t match exactly or where one side of the match was posted to the
wrong account. In these cases SubLedger Plus can automatically
generates the necessary write-off, reclassification, or inter-company
journal entry and then execute the match.


Daily SubLedger Plus Clearing and Suspense Account Reconciliations
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A Draft White Paper Published by BlackIron Financial Systems, LLC
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Automate Your Billing Accounting Cycle Using SubLedger Plus
blackironfinancial.com
Recap of Daily Workflow
Let’s recap the daily automated exception-based procedures that
accountants perform in this environment. The goal is to minimize these
exceptions by processing billing activity accurately and timely in your host
systems and creating effective rules in SubLedger Plus.

Exception Type
Corrective Actions


Unassigned accounting
Assign accounting from Accounting

Workbench. Create new rules for
Cause: No accounting rule
the future.
defined for transaction.


Roll forward variances
Create an adjustment to balance

your general ledger and billing
Cause: Transactions for a
system or approve the difference.
customer receivable balance do
not roll forward the opening
balance to the closing balance.


Bank reconciling items
Process the transaction correctly in

the billing system, ask bank to
Cause: Payments received are
correct an error, match transactions
not supported by bank
not identified by automated rules, or
transactions or vice versa.
create a correcting adjustment in
SubLedger Plus.


Suspense account
Process the transaction correctly in
reconciling items
the billing system, match equal and

offsetting clearing subjournal lines
Cause: Imported billing system
not identified by automated rules, or
unapplied payment balances do create a correcting adjustment in
not agree to the general ledger
SubLedger Plus.
suspense account inventory.

A Draft White Paper Published by BlackIron Financial Systems, LLC
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