I recently had the pleasure of hosting Institute of Management Accountants (IMA)’s Inside Talk Series webinar alongside our client, Kevin Hensley, divisional procurement manager for Sonic and EchoPark Automotive. I always enjoy the opportunity to show financial leaders why they should learn to love their bills – or rather, what is in them – and uncover new savings opportunities.
We can all relate to the unpleasantness of managing complex payables, like utility bills, whether they are for our household or our business. On a business scale, however, the complexity is magnified by several factors, such as varying bill systems, bill periods, and bill level detail across hundreds or thousands of locations. But the good news is, the more complex the bill, the greater the savings potential.
The Inside Talk Series webinar, organized by IMA for its members, was the most-attended webinar I have hosted, which is a testament to how many finance professionals out there are looking for strategies for handling their complex payables and managing the data that comes in each month. More than 2,100 individuals registered for the event and 1,200 attended and participated in the live polling and Q&A. This great turnout gave everyone an interesting glimpse into how their peers are currently handling complex payables at their companies.
Outsourcing Can Pay Off
Our first question for attendees was, “Is your company currently outsourcing complex payables?”
An overwhelming majority (70.7%) shared that no, they are still handling these payables in-house, while 20.3% outsource some or all complex payables. The remaining were not sure.
If your company is keeping all payables in-house, you are certainly not alone. It is a challenging task for even the most experienced and well-staffed AP departments and outsourcing this task can offer many benefits to your company, from freeing up staff to focus on other tasks, to uncovering billing errors and recouping overpayments. Sonic Automotive’s Kevin Hensley offered some great advice to attendees: Demonstrate to the C-Suite how outsourcing can give the company better visibility into exactly what you are spending, where, and why. Kevin shared that Sonic currently outsources electric, natural gas, water, telecom wireline and wireless payables to ENGIE Insight and leverages the Energy & Sustainability Management Platform to track their resource savings as well as overall ROI from outsourcing. They even have plans to add waste to their expense and data management services. “The corporate leaders want this visibility,” added Kevin. “They like seeing the data and the way it is presented. It also makes future project approvals easier.”
Data Uncovers Savings
Our second question of the webinar was, “Is your company auditing the data within your complex payables data?”
43.8% admitted that they do somewhat, but could be doing better, while 31.3% said that yes, they are auditing the data. 15.6% were not, and 9.4% were not sure.
Data is the foundation to build a resource management effort. Complex payables include several key metrics such as cost and usage. It’s important to drill down to the very base of the payables, line by line, and see how many resources each site is using. Once sites and usage totals are benchmarked, you can more easily spot outliers and focus efficiency efforts at those lowest performing sites, and then track the effectiveness of those projects on future usage and costs.
Using Data to Guide Action
Our third question asked, “If captured, is your company currently utilizing resource data to guide budgets and actions?”
The responses were more evenly distributed, with 39.1% answering yes, 31.7% answering “yes, but not as well as we could be,” 18.5% saying “no,” and the final 10.7% not sure.
Once companies have overcome the hardest hurdle—actually capturing the data in complex payables—the next one isn’t quite so daunting. As I said before, just knowing which sites to focus efforts on is revealed through this data. Businesses can also manage their energy procurement, Distributed Energy Resources (DER), and demand side opportunities and then track performance against goal or baseline. Also, having the ability to track historical data allows for more accurate budget forecasting.
Success Starts at the Top
Finally, our last question was, “Do you have corporate goals to reduce utility costs?”
47.9% of attendees reported no, while 35.7% stated yes, utility costs are a top expense. The final 16.4% were not sure.
It is vitally important—not only to cost reductions, but to the company culture as well—to set a corporate goal and gain strong support from the C-Suite from the beginning. In 2015, Sonic Automotive chose to focus on increasing energy efficiency, with a goal of decreasing overall energy spend by 10% over 24 months (January 2015-January 2017). Kevin shared that he was tasked with a plan to implement LED lighting retrofits across the organization, which entailed energy data management, the creation of an energy team and formal energy plan, setting organizational goals and gaining executive buy-in.
By January 2017, the company had reduced energy spend by 15%, created capital to invest in other projects and fostered a culture of energy efficiency. This first “win” also created the excitement and interest in seeking even larger savings opportunities.
This was a very successful webinar and hopefully, Kevin and I convinced those in attendance to learn to love their bills, and what’s in them. If you were not able to attend, you can view the recording here. I invite you to learn more about what your peers are doing to manage complex payables and the data within and how both technology and third parties, like ENGIE Insight, can help. And thank you again to IMA for helping bring this webinar to your members and allowing Kevin and me to share our experience and insight.