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.
This is because every Invoice usually requires the following:
-Ardent Partners
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.
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.
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.
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?
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.
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.
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.
Invoice characteristics:
How to automate:
Invoice characteristics:
How to automate:
Invoice characteristics:
How to automate:
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.