Innovation within the Downstream Oil and Gas Industry and What it Means for Their Credit Card Reconcilations
Since 2007, there has been an almost 5% decrease in primary energy consumption globally. And historically, downstream oil and gas organizations – the most common of which are your typical convenience stores (C-store) – have relied heavily on energy consumption as a large part of their revenue.
However, in recent years, many downstream companies have experimented with new ways to bring value to their consumers. Through technological advances and a new focus on an evolving market, downstream companies are making great strides in increasing their revenue with almost 80% of convenience retailers saying in-store sales increased over the first six months of 2018.
Despite a willingness from the industry to adopt modern practices that enhance the consumer experience, there’s been a slow evolution of improvements for the credit card reconciliation process in the office of finance.
Unfortunately, even after adapting to a changing marketplace and its needs, the influx of new transactions will inevitably surpass the accounting team’s ability to handle them accurately if done manually through spreadsheets. Downstream organizations will then quickly face financial exposure, such as write-offs and even misstatements, that quickly eat away at their increased earnings and damage public perception.
Below is an overview of the advancements that are occurring within the downstream industry and explanations of how these changes will have notable implications for the credit card reconciliation process and their office of finance.
To compensate for the decline in gasoline consumption, most C-stores have turned their attention to improving their food options. Due, in part, to their ability to differentiate the brand and their high-profit margins, 61% of C-stores are now committed to improving their food service.
Primarily through a focus on improving their fresh food options and implementing in-store cooking, major C-store players like Wawa, Sheetz, 7-Eleven, and Circle K are amplifying the food service aspects of their business and have achieved a 3.2% increase in non-fuel sales in 2017 in the US alone. And this change is a direct result of C-stores knowing their market and adapting correctly.
In a recent Nielsen survey, a third of millennials and almost half of Generation Z are willing to pay a premium for sustainably sourced ingredients that promote good health. The results show a stark difference in the priorities of previous generations who put a heavier emphasis on speed.
While food within a convenience store might not be a revolutionary idea, focusing on a changing market and adapting to the needs of a new group of customers has not only boosted sales but also diversified downstream’s revenue streams. However, it’s important to remember that this gain in revenue will naturally increase the number of credit card transactions that need to be reconciled, and even create a more complex reconciliation process
While fully implementing drones into C-stores’ overall business plan is likely decades away, current testing is showing promise.
Initially, concerns over possible civilian interference and the legality concerning airspace dissuaded the usage of drone deliveries. However, due to current test delivery times being as low as 10 minutes while being completed at a fraction of the cost of a full-time delivery driver, more and more resources are being put towards the research and development of a sustainable drone workforce.
C-stores have made great strides in pioneering a unique delivery system to enhance their customers’ overall experience. By removing a barrier to purchase, not only does revenue increase, but so does the number of credit transactions that need to be reconciled as the preferred method of payment continues to move further away from cash.
Admittedly, this trend is not being pioneered by downstream oil and gas companies; however, it does appear to be a promising option for future C-store locations. While traditionally not heavily involved in the convenience store scene, big players like Amazon and China’s BingoBox have begun rolling out cashier-less brick-and-mortar C-stores.
According to AiFi, the top frustration among shoppers is the time spent waiting in line. With this in mind, the removal of that barrier to purchase by removing said line is the logical next step.
And with similar ideas in other brick-and-mortar stores such as Starbucks allowing customers to place and pay for an order in advance through the mobile app, it is likely that the industry will continue to move toward allowing customers to retrieve food and drink orders faster than ever.
But with that being said, this technology will likely not be viable on a grand scale for quite some time, and it would be smart to let Amazon work out the kinks. As Amazon has discovered, there are typically large issues with the initial launch. For example, the first Amazon cashier-less store experiment was delayed almost a year after encountering difficulties with the app properly tracking items began appearing. However, the willingness to adopt previously unused technology within the industry will allow for C-stores to differentiate themselves and bring in new levels of profit to their organization.
The downstream oil and gas industry’s priority is to give today’s customer what they want as quickly as possible. And their ability to keep in tune with their customer’s needs and preferences has already started to produce the growth they desire. By all indications, the changes they are making and their willingness to adapt to change in this area will continue to fuel future growth.
However, with this growth comes a massive increase in credit card transactions that cannot be reliably handled with the traditional reconciling process. Manually verifying transactions between spreadsheets is time-consuming and can lead to an increase in write-offs.
Because almost 90% of spreadsheets contain critical errors, this hindrance is less of an if, and more of a when. While the industry has made impressive strides with embracing technological advances, that same level of changes needs to take place in their office of finance to make sure they continue to see the results of their efforts accurately reflected in their balance sheet.
To learn more about how you can better your credit card reconciliation process, download our eBook:5 Steps for Improving Your Credit Card Reconciliation Process.
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