Oil and gas operators and Oilfield Service (OFS) companies deal with numerous financial transactions, complex contracts, and compliance requirements. Work never stops for routine tasks, including produced water transport, crude hauling, well workovers, and other activities. To streamline these processes and their associated workflows, operators and OFS leaders have turned to technology, especially automated field operations software that integrates with oil and gas accounting software.
This article provides an overview of oil and gas accounting software, highlights key financial workflows impacted by it, and explores the benefits of electronic field ticketing and invoicing software for accounting and finance teams.
Overview of Oil & Gas Accounting Software
Oil and gas accounting software is designed specifically to meet the unique needs of the industry. It encompasses various modules that automate and integrate financial processes, including general ledger management, revenue recognition, joint interest billing, accounts payable and receivable, supply chain, production accounting, and financial reporting. These software solutions provide comprehensive tools and features to track, manage, report, and analyze operational and financial data.
Key Financial Workflows Impacted by Oil and Gas Accounting Software
Many functional departments are impacted by accounting and finance workflows; here are just a few of the most important:
- Revenue Management: Oil and gas accounting software automates the complex revenue management process. It tracks production volumes, calculates allocations of volumes and revenue, and generates revenue distribution statements, ensuring accurate and timely revenue recognition for different stakeholders.
- Joint Interest Billing (JIB): JIB is a critical financial process that involves sharing costs and revenues among multiple partners in a joint venture. Oil and gas accounting software streamlines JIB calculations, automates billing processes, and generates detailed reports, improving accuracy and reducing the risk of errors.
- Accounts Payable and Receivable: Oil and gas accounting software simplifies the management of accounts payable and receivable by automating invoice processing, scheduling, and tracking outstanding payments. This helps improve cash flow management and enhances relationships with vendors and clients.
- Production Accounting: Production accounting is crucial to oil and gas operations. Oil and gas production accounting software enables the capture, validation, and reporting of production data from multiple sources, ensuring accurate and efficient measurement of crude oil, natural gas, and produced water volumes, allocating those volumes back to producing wells and facilitating compliance with regulatory requirements as well as providing data for operational analysis and optimization.
- Asset Management: Oil and gas operators manage geographically dispersed and valuable assets, including wellheads, production equipment, pipelines, storage tanks, facilities, and processing plants. Oil and gas accounting software facilitates the tracking and management of these assets by providing accurate depreciation calculations, maintenance scheduling, and asset valuation capabilities. This ensures compliance with accounting standards, debt covenants and enables better decision-making regarding asset investments and retirements.
- Financial Reporting and Compliance: The oil and gas industry is one of the most heavily regulated and subject to complex financial reporting and regulatory frameworks. Oil and gas accounting software streamlines the generation of financial statements, tax filings, sustainability reports, and compliance reports, ensuring accurate and timely submissions. It also assists with adhering to industry-specific reporting requirements, including those issued by the Financial Accounting Standards Board (FASB) and the International Financial Reporting Standards (IFRS).
Benefits to Accounting and Finance
Integrating oil and gas accounting software with electronic field ticketing and invoicing solutions can significantly improve organizational productivity and efficiency for the field and, importantly, the accounting and finance teams. Some of the benefits for accounting and finance teams include:
Validated data. E-Ticketing from Engage Mobilize, for example, automatically validates manually entered data and load volumes for produced water transport, crude oil hauling, and other job types. Benefits of validated data include:
- Accuracy. Validated data is accurate data, creating confidence and making it easier to automate field and accounting workflows.
- Automated approvals. Using validated data from field tickets allows you to automatically approve tickets that meet your customized pre-approved criteria, freeing you to manage by exception.
- Reduce manual checking/proofing. Having accurate digital data significantly reduces time spent manually checking tickets and rekeying data, boosting efficiency and reducing the potential for errors and inaccurate financial data.
- Better information for operational analysis. Validated data means accurate information is fed into production accounting and other systems from the start, giving engineers a solid foundation for operational analysis and optimization.
Real-time data and visibility. Automated oil and gas accounting workflows, when combined with validated field ticket data, can significantly accelerate accruals with greater accuracy, delivering these benefits:
- Close the books faster. Having access to accurate data on a daily basis means the books can be closed significantly faster with fewer errors and no more waiting for run tickets or field tickets.
- More accurate accruals. Validating field ticket data at the time of submission increases the accuracy of accruals without having to wait for vendor invoices.
- Reduce/eliminate prior period adjustments. More accurate accruals translate into fewer prior period adjustments; when adjustments are made, they are smaller and less disruptive
Boost productivity and efficiency. A digitized oil and gas field service workflow means you can work smarter and substantially reduce the potential for errors:
- Elimination of manual processes. E-Ticketing and E-Invoicing solutions from Engage Mobilize can automate the field ticketing and invoicing process, eliminating the need to manually key data into systems or proof tickets.
- Resolve errors faster. Automated processes free-up time lost to manual tasks, allowing you to focus on resolving errors or discrepancies before the books close.
Reduced risk. Validated digital data provided in real-time also makes workflows less vulnerable to mistakes and drives accuracy.
- Prevent overbilling. Automatic data validation in a digitized workflow can quickly identify and prevent accidental duplicate tickets or invoices.
- Statement accuracy. Accurate JIB statements, royalty statements/payments, and AFEs facilitate timely payment and strengthen relationships with vendors, partners, and royalty owners. This also reduces the risk of incorrect payments and disputes.
Improved financial management. Oil and gas accounting software integrated with E-Ticketing and E-Invoicing helps improve financial management through automation, real-time data, and data validation.
- Better working capital management. Simplified, efficient processes based on accurate data helps align cash inflows and outflows.
- Stronger balance sheet. Improved working capital management can reduce borrowings on short-term credit lines, reducing financial risk.
- Improved profitability. Less borrowing on short-term credit lines translates into lower interest expense and more margin hitting the bottom line.
Oil and gas accounting software, when combined with electronic field ticketing and invoicing solutions, plays a vital role in streamlining accounting and financial workflows. These software solutions enhance accuracy, improve efficiency, provide real-time visibility, reduce risk, and enable accounting and finance teams to manage complex financial processes efficiently—productive and automated processes also lower costs, improving competitiveness and sustainability in our cyclical industry.
Schedule a Demo or Consultation Today
To learn more about how Engage Mobilize can help you streamline Oil & Gas accounting workflows to boost productivity and efficiency and deliver more value to the organization, call (720) 575-6695 or email Sales@engage-m.com
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