CFO Malcolm Smith revealed how Blackline has empowered Retailability through automation

Malcolm explained in a webinar that automation has improved Retailability’s reconciliation processes.

Retailability was founded 30 years ago with a chain of discount clothing stores called Style. Later, it added a men's fashion speciality store called Beaver Canoe, and it has since more than doubled its portfolio of retail stores.

In 2017, Retailability acquired 220 Legit stores from the Edcon Group, doubling the group’s portfolio to 450 stores.

“Having acquired Legit, we realised the processes and systems we had been operating on until then weren’t fit for purpose anymore,” Retailability CFO Malcolm Smith explained in a webinar hosted by CFO South Africa, in partnership with Blackline.

Malcolm’s finance team embarked on a journey to rationalise the company’s ledger and optimise its structure. The team enabled multicurrency, put in a budgeting and management reporting product, deployed a lease management package, and slowly put together all the pieces of the puzzle.

Then, in 2020, when Edcon ran into business rescue, Retailability was eager to build on the success of its Legit acquisition by acquiring 130 Edgars stores.

In the span of three years, the small box speciality retailer turned into a big box retailer trading fashion products, beauty products, cellphones, and even managing a fairly big financial services business as well. Retailability now has a portfolio of about 600 stores across South Africa, Namibia, Botswana, Lesotho and Eswatini.

The last mile of finance
From a turnover perspective, Edgars was more than three times the size of what Retailability had previously managed. “Going through a rapid growth trajectory like that really turned into a case of suffering from some proper indigestion,” Malcolm said.

He explained that, in a retail environment with a big portfolio of stores there’s a lot of transaction matching that needs to happen. “We started running out of lines on the Excel spreadsheet to reconcile these transactions. That’s when we knew we had outgrown Excel and needed to find a new solution.”

Blackline director of Africa Mike Hibbert explained that Malcolm was experiencing “death by Excel. The manual approach in terms of reconciling your accounts every month really hasn’t changed since Locus came out. We’re using more sophisticated systems now, but there are still gaps in those technologies,” he said.

This gap is what Gartner refers to as the “last mile of finance”, where the challenges usually occur. And the solution? To automate.

Solving the indigestion
In 2021, Malcolm was introduced to Deloitte South Africa partner and assurance services leader Greg Haskins through a mutual friend. “After raising some of the challenges I was experiencing with my friend, he told me that Greg’s speciality is to help CFOs improve their month-end close processes by bringing automation to the party,” Malcolm said.

When Malcolm and Greg met for the first time to discuss the challenges Retailability had been facing, Greg knew right away that he had to think about something that was going to be quick to adopt, was cloud-based and could be moved rapidly. “We recommended three modules from Blackline: an account reconciliation module, a task management module, and a transaction matching module,” Greg said.

Together, Malcolm, Mike and Greg set out on Retailability’s automation journey. “The first step was landing an account reconciliation policy and all the business rules that we needed to help drive standardisation across the organisation,” Greg explained. “From there, we translated that into a Blackline designed blueprint, which essentially set the scene for how we would then deliver the solution.”

They adopted a waterfall approach to delivering the reconciliations module, and an agile approach to delivering the transaction matching module. “By taking the agile approach, we were enabling a number of iterations to take place with the end-users in Malcolm’s team, which supported knowledge transition,” he added.

Within 10 weeks, Retailability were able to enjoy the benefits of automating their reconciliation process.

Empowering the finance team
Malcolm’s finance team previously had to extract data, build Excel templates and then wade through the transaction details manually. Now that the retailer has automated, most of the data loading and matching is automated, and all the team has to do is deal with the Excel spreadsheets.

“It has empowered us,” Malcolm said proudly. “Having gone through the process, I’m comfortable that as a finance team, we’ve been empowered to add additional work streams through the transactional matching engine and extend the range of accounts that we reconcile.”

Retailability also plans to start accepting buy now, pay later tenders through its till points. “We now have the expertise to self-manage and lead that project, and to build the matching environment to bring that online,” he added.

Malcolm explained that they keep pushing to find opportunities to extend the reach of Blackline, and that it has set Retailability up for forward growth.