Finance managers are tasked with the crucial role of managing their company's energy spend after contracts have been signed. They need to make sure that any energy bills they receive were expected and for places where the company is using energy. That retailer vendors bill based on contracted rates. And that the bills look right – the spend and metered energy used is what was expected.
The traditional challenge finance managers face is a volume one. Companies receive a high number of invoices, differently formatted, and sent at different times. Invoice management is further complicated by retailer vendors making the detail to check bills complicated – whereas the page saying how much and how to pay is usually very easy to read.
But a new challenge is emerging. Internationally Net Zero reporting standards are increasing in the number of businesses they impact. In Australia, only around 400 large emitters must report on their emissions, but the federal government has started a process to align emissions reporting to international standards. We’re expecting that the resulting legislation that is to be aligned to the UK reporting threshold which is adopted would impact between 4,000 and 30,000 businesses.
Most emissions are from electricity and gas usage with liquid fuel from vehicles and flights, and waste being smaller inputs. Electricity and gas data is notoriously difficult and complex to manage. However, with the use of technology, you can streamline your energy management processes and gain real-time visibility into your company's energy spend. In this article, we will explore the key functionalities needed for energy category management from technology and how you can use them to automate your accounts payable and finance functions.
Energy spend is a contingent category, paid for after it’s used like travel expenses or contracted staff. Making sure that billed amounts are correct is complicated by the deluge of energy invoices received from different retailer-vendors, in different formats, coming at different times.
Managing accounts payable for energy requires matching a company's properties and facilities to vendors and invoices, and then comparing billed rates and totals, to contracted prices and usage. While this may seem straightforward for a small number of properties, it becomes more complex at scale. However, data management is a fundamental feature of energy management solutions.
One of the most important activities for finance to prioritize is automating accounts payable and finance functions. This includes having a validated spend file of energy invoices, an accrual file of missing energy invoices, and budgets that can be compared to actual spend in real-time. Automating these processes makes sure bills are paid on time and provides real-time visibility into energy spend.
Combining budgets with accounts payable automation takes it a step further. Real-time tracking of forecast performance enables quick identification of overspending, identifying trends, and allows easy access to the underlying invoice data. Helping finance professionals make better-informed decisions, increasing visibility into financial performance, and having greater expense control.
Energy invoice automation simplifies the process of paying energy bills by creating consistent, validated payment files. Eliminating the need for manual bill collation, making the audit and payment approval process more efficient. Energy management in the finance function saves time and money for CFO’s by helping identify cost savings, automating invoice processing, and making sure energy bills are accurate.
With the growing emphasis on reducing carbon emissions, it is essential to have a net zero analysis that provides baseline, target, and forecast emissions. This analysis can also track abatement projects, which can help identify areas for reducing your carbon footprint. This is becoming increasingly important as compliance with emissions regulations and reporting requirements becomes a new business requirement.
It is the finance function that will become responsible for compliance with these regulations and ensuring accurate and timely reporting of energy and emissions data. This requires the routine and reconciled data that is easy to audit. The finance function can also help ensure that the company is meeting its net zero commitments by tracking and reporting on abatement investments.
Tying abatement investment to emissions reduction and net zero commitments is becoming a standard feature of annual reports. These reports are usually driven by the finance function, who can do more by tying spend to abatement return or effectiveness. This involves investing in genuine, high-quality, local projects, rather than off-shore or unreliable options. This way the finance function can help ensure that the company is meeting its net-zero commitments and making a real impact on reducing carbon emissions.
Managing energy spend is like trying to piece together a puzzle with missing pieces, but with automation it becomes like assembling a jigsaw with all the pieces in place. The right technology makes finance management of the energy category easier. By automating accounts payable and finance functions, finance managers can gain real-time visibility into their company's energy spend, helping them make better-informed decisions, increase visibility into financial performance and have greater expense control. As the focus on reducing carbon emissions increases, finance managers need to have net zero analysis that provides baseline, target and forecast emissions, and tracks abatement projects. Identifying opportunities for reducing their business’ carbon footprint. With the right technology, finance managers can be ready to meet emissions regulations and reporting requirements, and help their companies meet their net-zero commitments.
If you are interested in harnessing the power of technology for energy category management, contact us at Energy Action (ASX:EAX) to learn more about our energy management solutions and how we can help you automate your accounts payable and finance functions. Don't miss the opportunity to take control of your energy spend and reduce your carbon footprint.