Making it in the oil and gas business in recent years has meant operating in an increasingly lean, competitive environment. By working closely with your advisory team and making some tough decisions, you’ve made it through to 2021 and now are revisiting strategies to increase efficiencies and further manage your costs.
One of the often-overlooked costs for businesses—of all sizes—is bookkeeping and accounting. With a traditional model, you might have a person on your payroll doing basic bookkeeping, such as entering invoices and payments, job sheets and other data, and an accountant you meet with once or twice a year. You run this off a typical small business accounting software from a computer or laptop in your office, with a lot of manual data entry. This is a common experience, especially in oil and gas. However, there are a few downsides to this model:
- It may be expensive to enter data properly, and is a much slower process
- The data isn’t always up-to-date so you’re always looking at the past, not the present
- It only works on one computer, and one which may not be particularly secure either
- Often only one person has user access which means other key people cannot see financial and customer details
- You might not be making backups as frequently as you should (or at all) so loss of data is possible
The advantages of cloud-based accounting systems
Moving your accounting and bookkeeping platforms into a cloud-based system is one way to both save costs and get a more accurate and timelier overview of where you stand. Cloud-based means your information is accessible anywhere you have an internet connection. Users subscribe to an online accounting software solution and move their books to the cloud. From then on, they can access their accounts from any web browser, or from an app on their phone. Most users connect the software to their business bank account, so that banking transactions flow automatically from the bank to the books. This saves them from a lot of data entry.
For oil and gas business owners, the convenience of being able to upload and access that information from the field represents saved time and money. For example, you can take a photograph of an invoice, upload it to the cloud platform, and know the information is accounted for, right away.
The range of services vary, depending on your business requirements, and include helping you handle accounts receivable and payable, manage payroll, and see your profit and loss, in one place, in the cloud, rather than through a bookkeeper. More importantly, your data is dynamic rather than being reviewed on a quarterly basis or at year end. This allows your business advisors to help you manage costs as they can track inputs and outputs on a weekly or monthly basis, and pinpoint what is working or not.
At MNP, we see a lot of clients who worked in the oil and gas sector for years and then started up their own business, but they lacked the direct business or financial experience they needed. They might have had a bookkeeper or someone doing data entry but did not know how to interpret the financial information for the company’s benefit. By migrating them to a cloud-based system, we can provide that extra layer of analysis and interpretation in real time, rather than at the end of the year when it might be too late.
This is particularly important when it comes to managing your cash flows. Keeping track of what is coming in when and what needs to be paid now is huge and reviewing receivables in real-time to manage collections in a timely manner is key to this.
What cloud-based accounting and bookkeeping systems exist?
MNP’s own cloud-based system, known as ease, uses a combination of apps that work with your systems and bank information through established partnerships with Xero, QuickBooks Online, ReceiptBank and more. The apps used depend on your business needs and connect with your financial institution to match the inputs before integrating the information into the ease platform.
Each of these app providers maintain the highest level of security certifications and continually invests in technology and skilled professionals to protect client data and maintain service levels. Each vendor applies encryption to data in transit and at rest.
Is it time to move your system online?
The beauty of online accounting software is the flexibility it gives you to run your business from work, home, or on the go. The automation of your processes can help you manage costs by providing real-time accessibility, as well as the opportunity to streamline your bookkeeping. You will know more about your business than ever. But information is only as good as your ability to understand it and put it into action. Your business advisors help you make sense of the information services like ease provides and identify opportunities in the data to create plans to accomplish your goals.
Melissa Swayze, CPA, CA, is a Partner and the Regional Oilfield Service Leader in MNP’s Assurance Services practice in Weyburn. Melissa provides audit, accounting and tax services, strategic planning and business advice focusing primarily on the oil and gas industry.