How the Right Software Can Improve Oil and Gas Accounting
Oil and gas accounting is a complex endeavor. No matter how talented the finance teams, if systems and practices aren’t optimized, inefficiencies will creep in. Outdated field management softwares; lost job tickets and invoices; high DSOs – these and other logistics issues quickly complicate the books. And inefficient field operations management directly impacts accounting in the oil and gas industry – no matter how efficient your accounting tools.
The good news is that finding the right software not only solves the problems on the operational side of the business. It helps accountants provide transparency and optimizes the entire landscape of accounting in the oil and gas industry.
Oil and Gas Accounting 101
On a daily basis, accountants measure, record, and report the economic side of a company’s business activities. These financial reports serve as the primary mode of communication between the company and its stakeholders. Financial reporting’s two primary purposes are:
Help management effectively make decisions around a company’s objectives, strategies, strengths, and weaknesses
Provide vital information regarding the financial health and activities of the company, to ensure that the enterprise is being run appropriately
Accounting teams use tools like cost accounting systems and financial accounting practices to provide information on the profitability of company activities. In terms of cost accounting systems, many companies are embracing new technologies. However, a significant number are still stuck in the old ways of spreadsheets and whiteboards.
Oil and gas accounting methods need to be consistent and watertight in order to produce reliable financial statements. However, when companies don’t keep up with the evolving times and leverage the best tools available, this consistency and accuracy gets lost.
Operations Impact Accounting in the Oil and Gas Industry
In truth, most accounting issues in the oil and gas industry do not come from the lack of accounting tools or bad financial accounting practices. Usually, they stem from the operations side of the business.
For example: Liberty Lift, an artificial lift sales and service company based in Houston, had an unhealthy reliance on paper. All recorded documentation of field activities existed on paper, from field tickets, to JSAs, to unit/vehicle inspections and permits. Field crews took these tickets home or left them on a desk. This meant many of the tickets took far too long to become invoices. Their unorganized paper trails lead to duplicate data entries in their Excel sheets, which resulted in late and incomplete data reports.
Similarly, Basic Energy Services (BES), a wellsite service contractor in the US, was seeing their dated operations impact their oil and gas accounting. Their operations were hampered by various nagging logistical issues – including the fact that field crews used Post-It® notes as tickets, and lost them in mud and wind! When they found the right software, BES was able to standardize their data and processes, save money, and be more efficient. When they onboarded a cutting-edge field management tool, they optimized their quote-to-cash process, with powerful effects for the whole business.
Meanwhile, CEDA, an industrial and environmental services provider in Canada, needed to replace their old and clunky field management software. For one, fairly simple tasks needed multiple clicks, and users had to wade through multiple pages to find information. Aside from the costly and outdated software, product support was slow to respond to their complaints.
“With our legacy software, there had been no innovation from our provider in years. We were still using the same product that we had three years ago. We were overspending on poor digital functionality,” said Harminder Bhavra, Manager of Enterprise Transformation at CEDA.
The overall result of these inconsistencies and inefficiencies? Chronic revenue leakage. This is what the right oil and gas accounting software can immediately begin to prevent.
The Right Software Cuts Revenue Leakage
When these companies decided to implement FieldFX, they found the answers to their problems.
Immediately after implementation, Liberty Lift’s revenue streams tightened, and the leakage was no more. “We’re not losing tickets anymore. We can start tracking everything. Our tickets look better – they’re not handwritten,” David Snow, Liberty Lift’s IT Director, explained. After that, they moved on to the next phases of the implementation, which included:
Digitizing their Job Safety Analysis (JSA) and Inspection forms
Setting up price books, utilizing FieldFX’s Quoting System, and
Instituting a customer portal for their communities, allowing customers to see everything, from job tickets, to billings, to inspection reports
CEDA performed the switch from their outdated field management software to FieldFX. Right away, the tool’s reporting capabilities allowed CEDA to capture business data in a timely and accurate fashion. “FieldFX’s capabilities when it comes to reporting are second to none,” said Bhavra. “FieldFX helped us recapture and eliminate revenue leakage, accelerate cash collection, reduce our DSO, and automate our quote-to-cash process.”
For BES, some of their staff had been skeptical about it at first, thinking FieldFX was a solution “too good to be true”. But they immediately reaped the benefits after implementation, and now there’s no looking back.
BES is now able to dispatch trucks from one workyard to another without moving people around. They have also managed to integrate their SAP and FieldFX tightly. This keeps their data, records, and workflow statuses from getting out of sync. Brett Taylor, the company’s CTO, has been very impressed. “FieldFX has allowed us to be so much more efficient in our back office operations… much more effective in the financial side of our business.”
FieldFX Helps Enterprises Be Transparent
Inefficient field operations management directly impacts accounting in the oil and gas industry – no matter how efficient your accounting tools. But with FieldFX, these companies improved their quote-to-cash process, retrieved lost revenue and, in turn, became more transparent in accounting.
As Carla Wiginton, Office Coordinator for BES, put it: “FieldFX has been so great, I love it. Literally, I’d cry if I had to go back and use paper tickets again.”
Improve oil and gas accounting for your enterprise by investing in a powerful field operations management software like FieldFX. Visit us here to schedule a demo and find out more. Or, you can check out these other case studies: