Keeping projects running on time is critical for optimal performance. While tracking these projects for cost management purposes isn’t the exciting part of an operating venture, documenting the work correctly is critical to ensure budgets and timelines are met.
We will wager if you look at this documentation process in your own operations, you’re likely to find bottlenecks that slow your process efficiency. Common challenges include inaccurate coding, insufficient documentation, incompatible systems and redundant, labor-intensive processes. These lead to a lack of visibility into operational spend and wasted time and resources.
Fear not! These common bottlenecks can be easily fixed by digitalizing all or part of your source-to-pay process. These upgrades will bring significant value to your business. Examples include:
- Lowered processing overhead and G&A spend.
- Overbilling prevention.
- Reduced compliance violations and rogue spend.
- Access to spend reports for better budgeting and forecasting.
- Improved collaboration and relationships with suppliers.
Here are five different ways you can digitalize and automate processes to save your staff’s valuable time.
1. Digitalize invoices for shorter invoice cycles
Digitalizing your invoices is the first major step that will help you become more efficient, both in time and cost. Also, as your organization grows, digitalization and automation sets you up to easily scale with minimal effort. Processing a paper invoice costs between $15-$30, while digital invoices cost between $3-$6. While digitalization is beneficial for an oil and gas business of any size, the benefits are amplified for small- and medium- sized operations because automation allows these businesses to manage large invoice volumes without a large internal staff.
Stephanie Brittain, AP manager at TEP Barnett says, “With OpenInvoice, we process 10,000 — 15,000 invoices each month with a staff of two.”
Watch the video below to learn how the digitalization of invoices makes it possible for TEP Barnett to manage its high invoice volume without a large internal AP team.
Digital invoices are also easier to track. If you use an AP management system like OpenInvoice, the Enverus AP solution that operates on a connected network of oil and gas buyers and suppliers, you can communicate with your suppliers within the platform for better status tracking and faster dispute resolution, ultimately shortening invoice cycles. If you shorten your invoice cycles enough, you could negotiate more early pay discounts, saving your company even more money.
When choosing a digital invoicing solution, there are two things to look for:
- Connected to a network — Ideally, your invoice solution operates using a network of connected suppliers. The larger the community of providers in oil and gas, the better. This makes collaboration and communication much easier and faster.
- Flexible and customizable — Every business wants to grow, so while you may be considering digitalizing invoices only at this time, it’s wise to plan for how your technology can scale with your business. Ideally, you want a SaaS solution with customizable workflows to fit your business processes. With SaaS, updates and support are typically included in the license fee, so you save money by eliminating support and maintenance fees. All system maintenance work is done by the provider, freeing up IT resources. It should also integrate with various financial and ERP systems.
2. Automate price compliance for improved spend management
Reducing opex and optimizing capex are top of mind for energy businesses across the board. Managing digital price books is a way to support more automation and improve overall cost control through price compliance enforcement. With digital price books, you can empower your suppliers to keep the price book updated before your approval, eliminating overhead.
Discovery Natural Resources leverages Enverus digital PriceBook with OpenInvoice to systematically enforce compliance while reducing time spent manually reviewing alerts. Discovery estimates a monthly time savings of 12 hours per week by not manually enforcing compliance. Also, vendors have been trained in PriceBook collaboration, reducing the amount of time Discovery spends maintaining more than 120 active price books. Discovery has gone from updating 10 price items per day to less than 10 per week, an estimated savings of eight hours a month.
3. Auto-approve invoices
Adding automation, removing extra steps, modifying the sequence of steps or changing who performs the steps in these specific areas could make your entire workflow faster and more efficient.
After examining its OpenInvoice data, one large Permian operator realized invoice approvals were creating a bottleneck in its AP process. Often, in this approval process, the same person that approves the field ticket must also approve the invoice, creating a double touch. After analyzing the data, the company realized approvers averaged eight seconds approving low-value invoices. This indicated the approvers weren’t properly reviewing the invoices due to the volume of low-value invoices requiring approval.
The company decided to implement invoice auto-approvals. If the field ticket and the invoice contain the same information, the approver doesn’t need to review the invoice. The operator has since fully automated 40% of its invoice approvals and partially automated between 20-30%.
This same operator took this another step further, realizing more time savings, using OpenTicket, the Enverus digital field ticket solution, integrated with WellView. The field supervisor enters the cost estimation in the morning report and sends it to the office as part of the daily operation’s routine. The information is then exported into OpenTicket. If the ticket submitted by the supplier matches the morning report information, it is automatically approved. Suppliers can submit their invoices faster and it removes manual work from drilling and completion engineers. Everyone is happy.
About the automation the senior lead accountant at the operator said, “In Q2 2021, we took a daily report from WellView and started matching it up manually against our OpenTicket data with the intention to help our approvers quickly identify which exceptions they needed to review. As soon as we turned on auto-approval, we were able to match 80% of tickets, driving our average approval time from 15 to less than four days.”
If you were able to match 80% of your ticket volume, we suspect your drilling and completion engineers will thank you.
Automatic invoice approvals, or touchless invoicing, is just one example of a process improvement opportunity that helps energy companies reduce their overall invoice processing cycle times, which leads to more early pay discounts. By removing repetitive, manual work through process improvement, your team can focus more on high-value activities like cost analysis, forecasting and budget control.
4. Leverage mobile tracking technology to validate work faster
Workers often work in remote areas or at unsupervised job sites, so validating these jobs can be tricky. New advances in technology allow these workers to track their routes using their own mobile devices or those provided by their employer.
Mobile devices use GPS coordinates and geofence proximities to automatically capture details for suppliers related to job location and times. OpenTicket Mobile, the Enverus mobile app, even provides detailed views of routes and hours spent on the entire job on the work ticket.
Ticket details that match mobile data provided by the supplier are automatically validated. Alerts signal approvers if the number of hours or service locations entered on the ticket don’t align with GPS and geofencing records. This allows you to switch to a manage-by-exception model for more time savings.
This use of mobile technology is particularly valuable for LOE operations. Your operations teams in the field can turn more focus on maximizing production and managing job safety. Suppliers can leverage IoT technology to accurately track the work performed so they can focus on the work at hand.
NEW! OpenTicket Mobile uses GPS and geofencing technology to track job time and routes, making work validation much easier, especially at unmanned locations.
5. Digitalize the ordering process
If you want to maximize spend and time efficiency, managing the order-receive-invoice process digitally in one platform ensures consistency for cost objects and GL codes. This means orders can be referenced to field tickets and invoices, saving significant time with automated compliance checks and three-way matches. Also, automated three-way matching allows you to automate invoice payments without manual intervention.
When considering solution options, it’s important to remember that energy is unique as 80% of the industry’s spend is on services, so the scope and quantity of deliverables aren’t known until after work is performed. Procurement solutions that work on a discrete PO model only make processing services spend extremely painful and time-consuming. The best solution is one that is built specifically for energy workflows. Discrete POs are great for managing goods procurement, services require more flexibility. One example of this is Grayson Mill.
Grayson Mill Energy, an operator with assets in the Williston and Powder River Basins, digitalized their procure-to-pay process with the Enverus source-to-pay solution to automate the three-way match. Due to the many services the company sources, purchase orders were not always fit for purpose, but are often necessary for supply chain and accounting governance.
Mary Atkinson, director of Supply Chain at Grayson Mill said, “One of the things that I’ve found is while the three-way match is an easy concept, it’s very hard to execute. Now we have all the information: your cost centers, chart of accounts, your supplier information, your well ID, your AFE number, etc. That information is in the system already, and it all matches.
When you have a purchase order with approval, with coding upfront, it’s much easier to validate as a goods receipt. Then when a supplier submits an invoice, there is your match right there, all in the same system with the same information.”
Operations teams benefit from this digital workflow because by linking purchases and call-outs to coding and AFE line items, they can track against estimates before a field ticket or shipment is received, sometimes well in advance.
This advanced insight into spend, coupled with automated compliance checks and workflow automation, provides greater insight and control over the procurement process, saves time and significantly improves spend management on projects.
We’ve shown you different options on how you can accelerate and improve operations. To find opportunities in your own company, first, evaluate your workflows. Are there specific areas where there are bottlenecks? Due to high volumes, are there long ticket approval times, long payment cycles, or delayed invoice approvals?
Once you begin your own audit, you’ll likely uncover ideas. You’ll want to create a list of potential initiatives, and do a strategic analysis by determining the estimated time and cost of each initiative compared to the impact it will have on your organization. Based on this analysis, you can determine what makes sense to implement first. It doesn’t have to be an all-or-nothing approach. In fact, many customers that use Enverus solutions to streamline their source-to-pay processes tackle implementation in a phased approach.
The two important things to remember are:
- It’s not all or nothing — Taking just one of these steps, whether it’s digitalizing your invoices or your entire source-to-pay process, will improve your business’ efficiency.
- Incremental digitalization amplifies value — If you choose to digitalize your processes over time, each addition will only further improve operating efficiency and cost management, providing you demonstrable results that position your company as an operation worthy of investment.
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