Not all invoices are the same. For many finance teams, energy, telecom, waste and water invoices pose challenges because of their complexity and because, as research shows, between six and 12 percent of these invoices contain errors. I recently teamed up with CFO to present the webinar, “The Benefits of Outsourcing Management of Complex Payables”, which highlighted some of the pain-points and costs associated with managing these bills in-house, as well as some of the many benefits of outsourcing complex payables management.
What Makes Certain Bills Complex?
AP departments get hundreds or thousands of invoices each week. How do you gauge a bill’s complexity? One element is the frequency and variability of the invoice. Any invoice that comes in frequently and is always variable rather than fixed is much more complex. For instance, telecommunications invoices—with thousands of service types and price points—are more complex to handle than a quarterly landscaping or pest control invoice.
With complexity comes a higher probability for error. Without analyzing and capturing bill data, you could be missing contract errors, incorrect meter readings, extra services, incorrect unit prices, and more. It can also be challenging to capture and record data when it arrives in inconsistent formats from one vendor to the next.
Speaking of vendors, did you know there are over 25,000 waste, utility and telecom vendors across North America? On average those vendors have between six and ten different bill formats with different elements, making it easy to miss errors.
How Is It Impacting Your Budget?
Utility expenses follow labor and materials as the third largest budget item for many companies. According to the U.S. Department of Energy, the total annual cost of power for U.S. commercial facilities is over $190 billion.
Electricity, water and sewer costs must be budgeted for each year, but at the same time they are some of your most volatile expenses. Water is the fastest-climbing resource, have risen by 30 percent in just the last decade. While energy prices are currently low, they go through cycle patterns of volatility, and it can be difficult to predict future prices.
Without capturing the right data points, in the right format, it’s more difficult to create a more accurate and defensible expense budget.
Putting Bill Data to Work to Improve the Business
When captured, analyzed and tracked, data from these complex bills can serve as the foundation to your organizations facility decisions. This data, when appropriately benchmarked has influence that reaches into all areas of your buildings; from deciding which Distributed Energy Resource (DER) solutions make sense, to considering if you have the right size waste containers in place and how to drive down consumption. Bill data is the starting point to identifying and measuring the ROI of efficiency projects and opportunities.
Benefits of Outsourcing
There are huge opportunities for savings in your utility budget, and you can start uncovering those savings by leveraging software automation to help simplify the complexity of invoice processing. By improving the quality of the data from complex invoices, software can report on actual consumption and spend to drive greater visibility, cost savings and efficient resource management – regardless of your company size or location.
Ecova’s expense and data management solution leverages automated software to help our clients track and analyze utility expense data and uncover savings. In just one case, through data management and strategic planning, we helped our client, Arby’s, identify over $5.5 million in potential annual savings.
If you missed it, I encourage you to view our webinar and determine if outsourcing complex payables to Ecova would benefit your company and your bottom line.