JIB processing is a time-consuming and manual process for most companies. The size and complexity of JIBs require different processes and tools to manage JIB approval workflow separately from their AP invoice approval workflow. Some of the many flavors include accounting system add-ons, third-party software applications, emails and even paper signatures. This disjointed process is inefficient and raises the total cost of ownership.
Red Wolf’s JIB process was no different. When Red Wolf received a JIB, Jessica, the administrative assistant, scanned the documents, converting them to PDFs. Then Marshall, Red Wolf’s petroleum engineer, reviewed the documents and entered notes and comments using text boxes. This process was tedious and it was difficult to review the invoices thoroughly. After approval, Red Wolf sent the JIB to its accounting firm to be booked which created a bottleneck. From JIB receipt to approval, it took five to six weeks. The Red Wolf team wanted to gain more control over the process.
They turned to OpenInvoice to send JIBs, but the platform, designed to process operated invoices, didn’t allow for the level of activity-based detail they needed. To circumvent this issue, the team built an Excel template. When the JIB invoice was entered into Excel, the formulas would divide the data properly. They could then upload this data into OpenInvoice. This still wasn’t an ideal way to process JIBs.
“No one enjoys opening and uploading spreadsheets 15-20 times a day. Also, no coding was available, making it extremely tedious to input this information into Excel. This manual process was tedious for Jessica and made approvals difficult for Marshall,” said Austin, Red Wolf’s controller.
Austin learned about JIBFlow by Enverus at the 2020 virtual SPARK Conference, an annual Enverus conference focused on the latest in industry digital transformation technology and trends. JIBFlow integrates EnergyLink with OpenInvoice, so an accountant can send a JIB invoice from EnergyLink to OpenInvoice for approval via a seamless connection. This makes OpenInvoice a single source for all invoice approvals. JIB invoices can be processed using the same automation capabilities operators use with operated invoices including automatic routing, automated code verification and automatic approval of low value invoices.
Austin knew that Red Wolf could save time and effort spent processing JIB invoices, consolidate its data, and simplify the review process with the JIBFlow upgrade.
Austin says about the decision, “If there is a button where you can automatically transfer the data to OpenInvoice faster – why wouldn’t you do it? We are a lean enough organization that the cost-benefit is to automate the process so we can do more valuable work overall.” He adds, “I just wanted Jessica to be able to grab a cup of coffee during her day instead of doing all this busy work each month.”
The implementation was seamless as the team was already familiar with EnergyLink and OpenInvoice. “We appreciated the Enverus team because they listened to our pain points, made modifications and streamlined the product even more. Getting to work through it step by step with them was awesome. Enverus really partners with its customers,” said Austin.
Jessica set up coding and wells in EnergyLink, entering this information invoice by invoice. “It took a little time to lay the groundwork, but it’s definitely worth it,” she says.
After JIBFlow was integrated and the coding and wells were entered into EnergyLink, the first JIB Red Wolf received was significantly better. They could now send JIB details to OpenInvoice for detailed analysis. Auto-coding in OpenInvoice dramatically reduced the team’s manual input. These two additions simplified the review process for Marshall. All he did was scroll through the document to check a couple of details.
“Having one-click assurance that my JIBs are coded correctly is huge. No one has the bandwidth to go through all these JIBs and get them all right. There are 1,000, 2000, sometimes 8,000 lines of charges for one month, so before I couldn’t be very detailed. Knowing I cross-referenced those codes and can monitor costs that come in – I’m really quality-controlling what was sent. Also, in OpenInvoice I can view monthly averages for a well. I use this on our operated side of the business, too,” said Marshall.
For Red Wolf, the benefits of EnergyLink and OpenInvoice go beyond simplifying the JIB review and approval process. With detailed coding, the company categorizes costs into different categories for analysis. This data allows Red Wolf to find potential savings opportunities in their non-operated expenses, a task that is traditionally challenging to do for many operators.
“When you have the power of knowing what you are being charged at a detailed level, you can lower your costs in an area where traditionally people think you can’t,” said Marshall.
For example, they divide overhead and non-overhead charges. Marshall reviews the cost data on drilling materials like chemicals, saltwater handling or water disposal. He benchmarks this against their own operated spend to gauge if Red Wolf is being overcharged. In one recent example, Marshall noticed that some operators were spending three times more on compression than Red Wolf. Armed with this information, he questioned the operators about their high charges. He also monitors insurance and overhead charges closely to know if they are being undercharged or overcharged and see which wells are being operated efficiently.
“I’ve worked at other companies where, to approve a JIB, I’d receive a spreadsheet, verify it and email it. I don’t believe many other companies are looking at these costs the way we are. Having details broken out is something that enables us to negotiate with operators better than the high level blanket numbers we had before,” says Marshall. He also uses JIB details to benchmark Red Wolf’s operations spend against other operators’ spend and uses these numbers to forecast capital expenses and predict their own costs – an extremely valuable tool as drilling activity ramps up.
“I plan to look at drilling expenses and build these into a workflow to compare drilling day rates. With this I can understand why an operator has a higher-than-normal cost,” said Marshall.
“Being able to understand the numbers has been huge. Historically, it’s easier to control your operated stuff. In the industry, the thought is you’re not in control of the non-op stuff, so you just have to accept it as-is. Now we have detailed expense data that we can use to talk to the operators. Things are changing because we are paying attention to it,” said Austin.
He adds, “We’re spending way less time doing busy work and more time actually creating value. The busy work Jessica was doing was causing a headache for Marshall. Now that Jessica is doing less busy work and the data is more accurate, Marshall’s job is better….and Jessica is now fully caffeinated.”