Charlotte, NC (PRWEB) July 15, 2012
The International Energy Agency (IEA) announced on Thursday that a coming “global economic slowdown could put a lid on oil prices.” In a story covering the announcement, FoxBusiness.com reported that “a grim outlook for the global economy has muddied the demand outlook for most commodities”, and that “oil has been hit hard, with prices suffering their largest three month drop since the 2008 financial crisis in the second quarter.”
In response to this market volatility, many E&P companies are looking for ways to drive down costs, which they are finding requires enhanced working capital visibility, and greater supply chain agility.
In a study on working capital management entitled Cash in the Barrel, Ernst & Young reports that it takes independent E&P companies an average of 86.8 days to process an invoice. In most cases, this delay is caused by a very long approval cycle for invoice payments. Approval cycles for E&P companies can be extraordinarily long due to paper-based accounts payable systems that rely on manual communication between field drilling operations and executive offices.
In a recent report on invoice receipt and workflow, The Aberdeen Group suggests that best-in-class performance is 2.9 days to process an invoice. This means that an average E&P company is missing visibility into more than 80 days of possible commitments, variances, AFEs exceeding authorizations, spend by employee, materials transfers, and field invoices vs. actual invoices. If this lack of visibility is not corrected, E&P companies can quickly find themselves upside down, with spending and expenses growing out of control, and no way to catch up.
The only way to beat this cycle is to enhance real-time visibility into spending. Many leading E&P companies are accomplishing this with the help of technology that automates and streamlines the purchase-to-pay (P2P) process.
“With oil prices where they are now, and continued downward pressures, E&P companies must get maximum value from their drilling dollars”, says Mark Schaffner, Vice President of Marketing for Verian, “Gaining better visibility and better control of expenditures allows companies to ultimately get better value out of their drilling.”
Verian provides their E&P clients with a single technology platform that automates all of the main purchasing and invoice processing functions of their operations, from the creation and submission of original Authorizations for Expenditures (AFEs), to the executive approval and final payment of invoices. Verian software solutions are compatible with leading E&P accounting systems such as BOLO, Excalibur and many others.
Companies on the Verian platform use the technology to automate PO (purchase order) and non-PO spending, striving to eventually transition all spending to PO’s. This allows them to get visibility of all key information at the time of the AFE, instead of on the back end at the time of invoice receipt. Checks and balances throughout the software match AFEs to pre-defined expense categories, check budgets, expedite advance email and mobile approvals, point out discrepancies, match up incoming invoices, and export invoices to accounting systems for payment.
Adopting these types of automated processes dramatically improves invoice processing times and all associated costs.
According to Schaffner, E&P companies most successful with P2P automation start by implementing a single technology solution that allows them to become more efficient by managing all purchasing and invoice processing functions in one place. As they put people, processes and technology in place to manage this evolution, they are able to act more strategically, bringing things like tangible well costs, rentals, services and other contingencies into the system, continuing to drive down costs.
“The goal is to gain 100% visibility and mastery of your spend”, says Schaffner, “So you can drive down invoice processing costs, increase control of working capital, and be prepared for whatever oil prices do.”
Verian is the leader in universal purchasing and invoice processing systems. Founded in 1997 with headquarters in Charlotte, NC, Verian helps clients in a wide array of industries control spending and enhance visibility by providing them with a single software platform to automate their entire purchase-to-pay process. Verian’s broad and flexible product offering provides affordable, easy-to-use solutions that fit companies now – and when they change. Notable customers in industry segments such as energy, including oil & gas, retail, industrial, healthcare, financial services, government/non-profit and many others all trust Verian for intelligent purchase-to-pay automation solutions. Learn more at Verian.com.