Touchless Invoicing

Avoiding the High Cost of Low-value Invoices

eBook

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CHAPTER ONE

why touchless invoicing makes sense

Process automation is a proven way for energy companies to significantly improve the efficiency of operations.

Accounts payable in 2022 is seen as a value driver by many business leaders. Advances in business automation technology offer automation of the invoice intake, review and reconciliation process, but there is still tremendous opportunity to accelerate this process further.

How to capitalize on touchless invoicing
Making touchless invoicing possible
Maintaining control
Conclusion

In an Ardent Partners 2022 survey, 57% of business leaders said invoice payment and approvals take too long. In addition, AP's top hurdles in 2022 remain tactical in scope and are linked to everyday activities.

Touchless invoice processing, where an invoice is received and approved without an AP person manually opening and reviewing the invoice, presents an opportunity for AP departments in energy to massively improve both operations and financial efficiency. It is cheaper and provides more return than any other invoice workflow.

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CHAPTER TWO

Capitalize on Touchless Invoicing

The amount of time spent processing invoices is similar, whether the invoice total is $5 or $10,000.

This is because every Invoice usually requires the following:

Price Validation—Ensures invoice price matches current contracted values
Scope and Quantity—Goods or services being billed are validated by a company field representative
Cost Object (AFE or Cost Center) Validation—Costs are allocated to the right project
General Ledger (GL Code)—Costs are assigned to the right GL codes to track corporate expenditures by category
Procurement Code (optional)—Costs can be analyzed by spend category to optimize sourcing

The average processing cost for an invoice is $9.25."

-Ardent Partners

Despite the perception that oil and gas operations are dominated by expensive equipment and complex services, most industry invoices are low value.

In fact, in an analysis of invoices in OpenInvoice between January and December 2021 (figure below), 52% were less than $1,000, 85% were less than $5,000 and 89% are less than $10,000.

2021 Invoice Values by Volume in OpenInvoice

Most industry invoices are less than $1,000."

This pattern is consistent throughout operating areas and operation type. Exceptions include offshore development and production, where spend per invoice is slightly skewed to higher values, and EPCM projects, where invoices are often consolidated through one service company.

Since this is required of every invoice regardless of the value, automating invoice approvals, especially on low-value invoices, will pay huge efficiency dividends. You get time back and can choose where to focus more time and energy, especially with highly-skilled knowledge workers like engineers, accountants and senior management.

Automating invoice approvals on low-value invoices pays huge efficiency dividends.

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CHAPTER THREE

Touchless Invoices Made possible

Digital field tickets make automatic invoice approvals possible.

Before the advent of digital invoicing, all invoice and backup document generation, routing, coding, scope/quantity/price validation, and the vendor's approval process were done manually. With the introduction of digital invoicing in the 2000s, solutions like OpenInvoice, the Enverus digital invoicing solution made for oil and gas, automated some of the invoice processing components required.

In operations, the person responsible for the review and authorization of supplier work is often the same person who approves the invoice. This requires double effort because the approver must review the scope, quantity and pricing related to the work done and ensure the work is coded correctly. The invoice often comes in long after the work has been done, requiring the approver to do additional research. This is an unnecessary use of time and resources, particularly when both are in short supply.

With the 2016 introduction of OpenTicket, the Enverus digital ticketing system, scope and quantity are captured digitally. For companies using OpenInvoice, it is not necessary for operations engineers to review scanned PDFs as a backup with every invoice processed because the data is validated and coded automatically when a field supervisor verifies the scope and quantity on a digital ticket.

This is a ‘no-touch’ invoice.

In OpenInvoice, a touchless invoice means when an invoice is submitted, the system automatically validates the coding and auto-approves the invoice based on controls put in place by the operator. Once the invoice is auto-approved, it posts to the operator’s ERP system for payment. Two powerful capabilities make this possible: automatic invoice validation and auto-approvals. Every invoice attribute (scope, quantity and price) is automatically reviewed and validated between the approved digital field ticket in OpenTicket, pricebook or purchase order, and the invoice; if there is a match, the invoice is automatically approved. Auto-approvals allow operators to automatically route, code and approve invoices at or below a specific spend threshold. By reducing the number of touches required by accounts payable and operations, you speed up the entire invoice process.

What if you could auto-approve your high-volume, low-value invoices like water hauling tickets? How much time would this save your AP team, providing them more time to focus on core tasks that drive the business forward?

What if your company took this further and automated invoice approvals for invoices under $5,000? Then $10,000? You would essentially eliminate 90% of your AP burden!

Each of these attributes below is reviewed and validated between the digital field ticket and invoice with no manual intervention. Internal teams (engineers, accountants, senior management) gain more time to work on high-value tasks.

Price Validation

Operator and supplier have agreed to contract pricing and this contract is referenced on the digital field ticket and the invoice. If the pricing does not match the contract, the invoice is automatically rejected.

Scope and Quantity

The company field supervisor validates scope and quantity of work done on the digital field ticket. If the scope and quantity on the digital invoice do not match what is on the field ticket, the invoice is rejected.

Cost Object

The field supervisor enters the AFE or Cost Center on the field ticket, analogous to the stamp used on the paper field ticket. The AFEs and Cost Centers are provided directly out of the corporate ERP.

General Ledger Codes

The system uses smart coding to automatically allocate goods and services from a given supplier to the correct GL. The system can even use a different GL for the same goods or service from the same supplier if it is used during a different phase of the operation (i.e., drilling versus production).

Procurement Code

The same process that validates the pricing through the digital price book can apply a procurement code to any good or service identified when the item is generated in the field ticket. It will automatically carry through for the life of the document.

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CHAPTER FOUR

Maintaining Control

OpenTicket and OpenInvoice are remarkably flexible in defining rules and permissions related to digital document workflow. This allows organizations to manage auto-approvals very explicitly, ensuring corporate guidelines are adhered to and business rules are respected.

Every invoice under $1,000 can be automatically routed, coded and approved in this new digitized process. If a field ticket is approved by someone in operations with the financial authority to approve an invoice based on that field ticket, the invoice is automatically approved. No one is required to review the invoice any further. Once this is realized, and company can examine invoices under $5,000, then $10,000, eliminating 90% of the accounts payable burden.

CASE STUDY: DISCOVERY NATURAL RESOURCES AUTOMATES 40% OF INVOICE APPROVALS

Watch the video to learn how Discovery Natural Resources automated 40% of its invoice approvals with touchless invoicing.

Also, this workflow doesn’t need to be implemented all at once for companies to reap the benefits. Rules can be configured to automatically route invoices under a defined threshold, coded and approved. A company can also choose to automate approvals by invoice type, starting with invoices with consistent coding like overhead and utilities, then automate pre-approved spend invoices, then end with all LOE and capex invoices. Essentially, the approach and controls in place will be unique to every company.

One large operator in the Permian has automated almost 75% of its invoice approval process with auto-approvals.

How to Automate Approvals by Invoice Type

Overhead & Utilities

Invoice characteristics:

Consistent, recurring, predictable
Coding the same
Always pay

How to automate:

Programmatically code invoice
Threshold-based system approval
Exception routing

Pre-Approved Spend

Invoice characteristics:

Financial control in the requisition process
PO updated as goods delivered, services performed

How to automate:

Automated rate, scope and quantity
Programmatically code invoice from purchase order
Three-way system approval
Exception routing

LOE & Capex

Invoice characteristics:

Negotiated price agreement
Digital ticket with scope and quantity
Field team codes digital ticket and approves with e-signature

How to automate:

Automated rate compliance enforcement on ticket and invoice
Automated rate, scope and quantity compliance enforcement on ticket and invoice
Programmatically code ticket from price book
Programmatically code invoice from price book or ticket
Exception routing

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CHAPTER FIVE

CONCLUSION

Most invoices processed in oil and gas are surprisingly small. Yet the time required to process an invoice remains the same, whether it’s $100 or $10,000.
Touchless invoicing offers a massive opportunity for energy companies to reduce their overall invoice processing cycle times, which leads to more discounts. Also, by removing repetitive, manual work, your team can focus more on high value-add activities like cost analysis, forecasting and budget control.
Touchless invoicing is cheaper and provides more returns than any other invoice workflow.
OpenInvoice paired with OpenTicket, solutions made specifically for energy, create a completely automated, paperless end-to-end invoicing process.