Article
Oil and gas accounting: Frequently asked questions from the industry
In today's business environment, many oil and gas companies need help navigating the industry's complex financial landscape, which includes fluctuating markets and stringent regulatory requirements. Oil and gas accounting can be a labor-intensive process. While tracking your company's finances and maintaining basic bookkeeping is essential, it has limited use as a tool to give companies a competitive advantage. Instead, business leaders need data that can help support critical business decisions and fuel growth.
Outsourced accounting provides access to specialized expertise, ensuring accurate financial reporting, compliance with regulations and efficient management of production accounting. It also allows oil and gas companies to focus on their core operations while reducing costs associated with maintaining an in-house accounting team.
However, many people don’t know where to begin or if an outsourced accounting team is even necessary for their business. To help answer your questions we gathered the top questions we frequently encounter.
What are common trends or pain points in the industry that outsourced accounting helps address?
At the center of a complex and changing regulatory environment, the oil and gas industry faces challenges on a daily basis. Many oil and gas companies struggle with a backlog in non-operating joint interest billing and revenue data entry, leading to shortcuts, workarounds or delays in the monthly closing process. Outsourced accounting can create business process automation, resulting in oil and gas companies achieving significant savings and reduced cycle times.
Another common issue many oil and gas organizations face is the inability to produce meaningful and timely well profitability reports (WPR) or lease operating statements (LOS) that answer operational questions and add insight into managing the business. You need the capability to both summarize and dynamically drill into the details of WPR and LOS. These should be groupable and subtotaled by various attributes, such as location, field, tank battery, route, play or acquisition, allowing you to identify trends, issues and errors in real-time, rather than 30 to 60 days later. Outsourced accounting offers dependable, cost-effective solutions to reduce your overhead and the effort spent managing day-to-day accounting tasks.
Why do I need outsourced accounting?
Outsourcing provides partial resource expertise on demand without having to hire, train or manage a team that may not have a clear career path within your organization. There are enormous hidden costs associated with retaining your own staff including overhead, benefits and the time and energy to manage, direct and maintain them.
Outsourcing your accounting function can transform how you manage financial data by automating standard accounting tasks, offering targeted insight on specific industry trends, providing real-time information on key performance indicators (KPIs) and granting access to top-level accounting talent when needed.
Oil and gas companies want real-time access to their numbers and the ability to slice and dice information as needed. Through outsourced accounting, you are provided with seasoned professionals to interact with and manage the details for you. Our team can help transform the way your business accesses and uses financial data to make proactive and strategic decisions.
When does it make sense to start outsourcing?
Outsourcing is frequently considered when a driving force for change arises, such as staff or leadership turnover, a new acquisition or divestiture or a system change.
Businesses often face a need for better systems and data, as having access to the most up-to-date accounting systems and advisors ensures improved data quality and visibility into previously inaccessible information, such as key ratios, trends, and industry comparisons. When in-house staff cannot provide timely financial information, opportunities for necessary adjustments may be missed.
Additionally, if essential accounting data is manually entered by non-experts, the reliability of financial information can be compromised. In such cases, hiring an outside team with more training, credentials, and experience can be beneficial. Labor costs and the challenges of maintaining an internal accounting team may also drive businesses to seek professional financial advice externally. By leveraging an outsourced accounting team, businesses can access the expertise and resources needed for appropriate accounting, operational, strategic, and transactional support, allowing in-house staff to focus on core business and revenue-generating functions.
Remember, you don’t need to outsource everything. We collaborate with clients and their existing teams to identify the most efficient and cost-effective solutions, whether through full or partial outsourcing. Our goal is to enhance the daily management of our client’s organizations by providing robust financial and operational data through our tailored outsourcing approach.
How do I get started with outsourced accounting services?
We’re here to serve as an extension of your business and address all your accounting needs. Our team can be up and running within days, processing accounts payable invoices and running joint interest billing, among other services. Our ability to hit the ground running with pre-built best practice system configurations and business processes enables our clients to make informed decisions about their policies and processes to meet their requirements best. After connecting with us, we will craft a high-level plan and a clear or fixed monthly price model, so you can make an informed decision and compare costs clearly and quickly.
If you’re questioning whether to work with us, here are some key benefits our clients often mention:
- Reduced headcount and infrastructure: Lower general and administrative (G&A) costs by decreasing your headcount and infrastructure
- Increased efficiency and minimize costs: Flexibility to scale services and staff according to your needs to make business decisions that drive results
- Automated and streamlined processes: A fully integrated oil and gas accounting system to improve internal controls and reduce risks
Outsourcing your accounting functions with Baker Tilly can revolutionize how you manage your back office, allowing you to concentrate on your core business functions. Whether you need full-scale accounting services or seeking assistance to manage overflow work, our team can help you build a tailored solution to meet your business needs today and scale with you as you grow. We serve as your one-stop shop for your back-office accounting needs by providing innovative cloud-based technology platforms that simplify your financial reporting processes. Our collaboration reduces your manual workload and enhances daily efficiencies by implementing real-time reporting, easy-to-use dashboards and automated processes. By tailoring a cloud solution that fits your business needs, business leaders will have the data that can help support critical business decisions and fuel growth. We're here to meet all your accounting needs, providing clarity and insights to help you make decisions that propel your business forward.
