The San Fernando Valley has several industry clusters – entertainment, health care, biotech. But what about accounting software? Two of the three companies that provide software used in closing out a company’s books are in the Valley – BlackLine Inc. in Woodland Hills and FloQast in Van Nuys. Mike Whitmire, chief executive of FloQast, said that it is unusual for the same region to have two accounting software companies located here. “If you asked someone if this was a place where management software was developed, I don’t think you’d find it too high on that list,” Whitmire said. Both companies specialize in making software to close out financial books in specific periods and reconcile accounts to make sure the amount of money coming in matches the money spent. Size differences BlackLine is the much bigger of the two companies. It is publicly traded on Nasdaq and has offices in Europe and Japan. FloQast, on the other hand, is the scrappy underdog but one that has gotten some big customer wins against its competitor. Despite their differences in size and customers, FloQast and BlackLine are similar in their software that allows finance professionals to collaborate, organize documents and automate closure tasks. Having spoken with some former BlackLine employees, Whitmire said that he has heard anecdotally FloQast has become a problem for the larger company for the better part of three or four years. “It is not discussed publicly too often by them,” he added. Attempts to reach a representative of BlackLine were not successful. According to G2, a website for software reviews written by people who purchase and use it, FloQast rated 4.8 out of 5 stars based on 129 reviews while BlackLine scored 4.3 stars based on 239 reviews. “I like that Floqast ties my monthly schedules to the trial balance and compares the two on the same screen,” wrote reviewer Sarah R. last month. “It saves time and I am able to spot problems immediately.” “For me, the number one advantage of using BlackLine is the fact that all my reconciliations are stored in one place that I can easily access from anywhere,” Jose B. wrote in April. “It is nice not having to spend hours looking for a specific piece of backup.” The size of the companies that reviewers work at reflected the difference between the clients of BlackLine and FloQast. Seventy-one percent of those reviewing BlackLine worked at enterprise companies or those of 1,000 employees or more, while FloQast had an equal percentage in the mid-market range of 51 to 1,000 employees. BlackLine clients include Dow Chemical Co., Coca-Cola Co., Hyatt Hotels Corp., Hershey Co. and eBay Inc. During BlackLine’s most recent conference call with analysts to discuss first quarter earnings on May 2, Chief Executive Therese Tucker emphasized how the company’s customer centric focus sets it apart from the competition. BlackLine has invested millions on education, training and leadership resources for its customers, and during the quarter the customer success team hosted activities with more than 250 customers to improve their use of BlackLine products and identify a value creation roadmap, Tucker said. “Our customer success team does not carry a sales quota; instead their mantra is helping, not selling, our customers,” she added during the call. BlackLine shares closed July 31 at $44.60. The company released its second quarter earnings on Aug. 1. Gary Klintworth, managing director and co-founder of ARC Consulting LLC, a finance and accounting consultancy in San Francisco, confirmed that BlackLine and FloQast are two of the main players in the account closing software market. The pair’s software is meant to give C-level executives visibility into accounting procedures and to have a list of steps that their staff need to perform to do a proper close. The software also allows them to see where they have gaps in terms of staffing, Klintworth said. “It is to make sure they have that scheduled out and they have the right staffing and systems in place,” he added. The third company doing closure software is Trintech Inc., headquartered in the Dallas area. FloQast and BlackLine have taken a similar approach in their respective growth as both have internally built their technology, Whitmire said. Trintech is different having grown by acquisition, he added. “They have acquired a bunch of business and cobbled them all together to become this big software company,” Whitmire continued. “They compete with us, but they are way up market in Fortune 100 or 500 companies.” Accounting made efficient The origins of both companies say much about their place in the market. BlackLine was founded in 2001 by Tucker, whose background is in computer programming. She started the company “because I like to build software,” Tucker said in a 2017 interview with the Business Journal. “It is the most amazing thing in the world to be able to write a list of instructions for a computer and it will go off and do that,” Tucker said BlackLine went public in October 2016 and has a market capitalization of $2.5 billion. Whitmire founded FloQast in 2013 and it moved from North Hollywood to Sherman Oaks before settling in Van Nuys with its more than 100 employees. The company’s software was built out of what Whitmire experienced when he was an accountant with Ernst & Young doing the books for midsize public companies and later a startup that went public. An appeal of the software is that it’s built for accountants by accountants, Whitmire said. “We have accountants across every department of the company,” he added. Ryan Call, the accounting supervisor at Griffin Capital Real Estate Co., in El Segundo, is among those who like the software. “It is a great tool to help you manage an accounting department in a modern context,” Call said. “It is a very efficient, well thought-out application.” Call also has experience working with BlackLine’s software when he was at real estate firm CBRE Group Inc. in Los Angeles. When he came on board at Griffin, he was tasked with finding a financial close software. He thought of just repeating what he did at CBRE and use BlackLine and that it would be a “slam dunk.” Then Call learned about FloQast and he was taken aback by how complete, accurate and efficient the software was. Prior to using the Van Nuys company’s product, Griffin had been closing its books on a quarterly basis, Call said. “Now we are doing monthly closes and monthly reporting packages,” he explained. “Overall the accounting organization has gotten a lot more sophisticated since the inception of FloQast at Griffin.” Jennifer Kostka, senior manager in accounting at pet food maker WellPet LLC, in Tewksbury, Mass., also has used both BlackLine and FloQast software. She used BlackLine when working at publicly traded medical device company Hologic Inc., in Marlborough, Mass. During the financial close period, there would be morning meetings to find out where people were in the process. It could take up to a half hour out of the day. “You were losing productivity to have other meetings with other departments or doing journal entries or analyzing balance sheets (reconciliations),” Kostka said. Such meetings are not necessary with FloQast, which has a checklist feature to let Kostka know how far along staff is in the close process. “I use the checklist as a measurement to see where people are within their responsibilities and where we are with the month end deadline of our close,” she said. ‘Shelfware’ Whitmire said that his company tracks win rates of clients against BlackLine on a quarterly basis. For the most recent quarter, the win rate was 70 percent after it had been in the 50 percent range for the quarters prior to that. “Given what we are seeing in Q2 and Q3 and beyond, I don’t think that number is going to be changing anytime soon,” he added. There have been about 15 accounts that have switched from BlackLine to FloQast. The reason those clients changed was that implementation of the software was never really done, Whitmire said. “They are getting some benefits (from the software) but much of it just became shelfware and was never used,” he added.