Some days, running a business in the oil and gas industry can feel like an epic battle on the football field. As your team fights for every “yard” of profit, foes are working hard to take back the ground you’ve gained.
“Advanced technologies and shifting regulations are leveling the playing field for thousands of ambitious energy companies,” said Brad Vincent, executive director, specialized industry banking at BOK Financial®. “Every company—large and small—is looking for an edge to help them get ahead.”
While most companies focus on streamlining core operations, many overlook easy gains in the finance department, Vincent explained. Enhancements in treasury services could be the “X factor” energy firms need to cut costs, increase returns and guard against financial fraud.
Here’s how a solid treasury services partnership can give your company a competitive advantage on both sides of the ball:
Empowering Your Offense
Calling the right treasury plays may not create a direct source of revenue, but it can help reduce expenses and put you in a position to seize growth opportunities. Here’s how:
Cash concentration and zero-balance accounts
Startup energy businesses need ready access to liquid funds to meet day-to-day needs. As these businesses expand, they may create multiple accounts for different departments—with excess cash sitting idle in each one.
Cash concentration accounts automatically sweep cash from disparate accounts into a central depository, leaving sub-accounts with a zero balance at the end of each day and allowing funds to be put toward working capital needs or investments.
“Cash concentration is a great strategy to help companies maximize returns and improve cash management,” said Kim Gwin, treasury sales manager at Bank of Texas. “By pooling funds to a central account, you gain better visibility to meet immediate business needs and earn higher returns by sweeping excess funds to an interest-bearing account.
Automation and enterprise resource planning (ERP) integration
As companies grow, manual processes become time-consuming and more prone to human error. Integrating automation tools with your existing ERP system can free your team from repetitive tasks and accelerate payment processing, forecasting and account reconciliations—enabling you to scale up operations without additional staff.
“The efficiencies gained from automation help companies achieve economies of scale,” said Gwin. “In the treasury context, that translates to lower costs and higher productivity. At the same time, cleaner data makes for more informed financial decision-making.”
Corporate credit cards
For energy companies with traveling field personnel, continuing old-school per diem and reimbursement procedures could be a costly mistake. Issuing corporate cards to employees can improve control over spending and lead to significant cost savings.
“When used wisely, credit cards act like an interest-free short-term loan, and they offer some powerful tools and rewards,” said Gwin.
For example, your company can customize card permissions, track and categorize spending, or even receive rebates for high-volume spending, offsetting expenses.
FORTIFYING YOUR DEFENSE
A strong offense is important—but your gains are always at risk. Financial fraud is one of the most daunting threats facing the energy industry today.
“Fraud prevention measures should extend well beyond the IT department,” said Gwin. “The finance and treasury teams can play a leading role by ensuring their processes are as airtight as possible.” Here are several ways a treasury services partner can defend your organization:
Fewer paper checks
It’s easy for criminals to intercept checks in the mail and cash them or use the information to create counterfeits. Reduce your risk of check fraud by transferring funds electronically through ACH or other methods. If your company must issue paper checks, use protections like Positive Pay, where your bank will compare each check against a customer-provided list of approved payees.
Zero-trust environment
Fraudsters grow more convincing every year, and education is critical.
“All employees should at least know the basics, like not clicking on unknown links or giving out confidential information,” said Gwin. “But people with the authority to make financial transactions must be especially vigilant and learn to recognize the red flags of financial fraud, which aren’t always easy to spot.”
Anything out of the ordinary—an urgent email from the CFO, a request for account information, or a vendor changing their payment instructions—should be investigated with a phone call to a trusted person.
Separation of duties
Financial fraud can happen from within. Separation of duties (SoD) ensures no single person controls a financial process, minimizing temptation. Leading ERP and banking platforms can enforce these safeguards by requiring both an issuer and an approver for outgoing payments.
“As the energy industry grows increasingly complex and competitive, companies can’t afford to lose time and money dealing with security issues,” said Vincent. “With the right tools, training and policies in place, the treasury team can worry less about fraud and focus on effective financial management.”
The Right Partner
Whether it’s defending against dangerous attacks or making smart money moves to maximize returns, a trusted financial services partner can help your company gain a competitive advantage. BOK Financial has over a century of experience in the oil and gas industry and the expertise to help you realize your goals and grow stronger.
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