As More Midmarket Firms Leap Overseas, the Cloud Softens Their Landing, Says BlackLine’s CFO

Woodland Hills, CA — As more midmarket firms pursue opportunities offshore, cloud computing applications are once more proving to be a critical ally for midsized companies whose global ambitions continue to stress-test accounting systems that originally took root inside the U.S.

“The more global you are, the more you want to be in front of the process these days and not behind it,” says Charles Best, CFO of BlackLine Systems, a midmarket cloud applications firm that specializes in automating the financial close.

Maintaining multiple sets of accounting standards, including IFRS, GAAP, or statutory accounts, creates an even more thorny burden on midmarket firms when it comes to closing the books each month, explains Best, who says that the number of reconciliations, journal entries, etc., becomes multiplied for each set of books that a firm maintains.

“Any company that is looking to expand and grow offshore has to be working toward continued compliance and enhancing the process by which these controls are being put in place, and if you have subsidiaries in different areas, you have to be mindful of all of the standards that are out there,” Best explains. For BlackLine, a firm that has experienced year-over-year growth of 50 percent for each of the past 6 years, the global opportunity has increasingly become a central focus.

In a 2013 interview with Middle-Market Executive, BlackLine CEO Therese Tucker stated that the firm’s growing offshore opportunities had helped to trigger a recent recapitalization for the firm. “Europe is now adopting SaaS at a pace we have never seen before, so it’s definitely the time to do it,” she said, in reference to private equity firm Silver Lake acquiring a majority stake in BlackLine.

“It’s super expensive to do business from a distance, but we see a lot of potential business, and we’re just really happy that we now have the money to pursue it,” Tucker added at the time.

To stay in step with the world’s converging accounting standards, the firm has recently added some additional controls to its suite of offerings to enable the completion of an IFRS reconciliation simply by comparison to one or more GAAP or statutory accounts.

What’s more, the applications vendor recently introduced a solution, dubbed COSO Jumpstart, to help companies comply with new guidelines set forth in the updated 2013 COSO Internal Control—Integrated Framework. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released the original version of the COSO Framework back in 1992, and over time it has become the de facto standard for designing and implementing internal controls.

According to Best, “As a CFO, I want to think about where we want to be. Finance involves a lot of the back-end processes. The question I look to answer is, ‘What will be required of these processes in 3 to 5 years?’”

Asked what the availability of cloud applications has meant for BlackLine’s own accounting challenges, Best answers:

“With these tools, the data is there, and rather than worry about a close, I already have a full analysis of data that I can provide to other people so that they can make decisions. Putting individual applications together and having them communicate automatically or through automated steps is where the business world is moving.”