The Financial and Environmental Impact of Accurate Energy Invoice Validation for Large Corporations Tom Hedges June 18, 2024

The Financial and Environmental Impact of Accurate Energy Invoice Validation for Large Corporations

Improving your company’s financial performance while meeting sustainability targets can be a challenge. However, there’s a crucial strategy that makes a difference – one that’s often overlooked – and that’s energy invoice validation.

Organisations can save significant costs by checking the accuracy of energy bills, while improving their sustainability at the same time. This article explores these dual benefits in detail.

The Financial Implications of Energy Invoice Validation

Energy costs are a significant operating expense for large organisations, but billing inaccuracies are common, leeching significant resources from company budgets. Estimates on how much extra consumers pay due to errors range from 5% to 15% which, of course, mounts up in large-scale operations.

Invoice verification involves scrutinising utility bills to ensure they accurately reflect actual consumption and agreed rates. Correcting these errors means capital can then be used for its intended purposes.

Here’s a detailed look at the financial benefits of invoice validation and energy analytics software.

Error Detection and Correction

Billing errors occur frequently for domestic and commercial customers alike. Some of the most common errors include:

  • Overlapping billing periods: The total number of days you’re billed for each month can vary, but it won’t necessarily be in the way you expect. If overlaps occur, you may be charged for the same day in different months.
  • Balance brought forward errors: Debit charges may be applied from previous invoices, but this is not always done correctly i.e., it could be linked to a previous balance that you’ve already paid – or to a different account entirely.
  • Duplicate line items: Line items can be displayed twice on invoices, so many customers pay twice for certain charges. All invoice details need to be checked thoroughly.
  • Incorrect rates: The rate you’ve agreed on will not always be reflected on your invoice. Always check to make sure the right contractual terms have been applied.
  • Account credits not applied: If overpayments have been detected and credits have been given, the balance of the next invoice may not have been adjusted to reflect those credits.
  • Calculation errors: Whether down to human error or other causes, calculation errors do happen, so invoices need to be cross-checked against meter readings.
  • Malfunctioning smart meters: At the end of 2023, 98 million smart meters in the UK were faulty. When these meters aren’t working as they should, energy companies have to rely on estimates and of course, these estimates aren’t always corrected later on.

Many of these errors could be lurking in your energy bills. Collectively, the savings may be significant once corrections are made.

Cost Avoidance

Ensuring bills are accurate before they’re paid means companies can avoid overpaying, which may improve cash flow. Avoiding these costs in the first place also saves time that may be wasted later when attempting to get a refund.

Budget Accuracy and Predictability

The consistent and accurate validation of invoices ensures that costs are predictable and align with forecasts, enabling better financial planning.

Optimised Energy Contracts

Invoice validation provides insights into actual energy usage patterns, enabling better negotiation of energy contracts, helping companies to secure more favourable terms.

Avoiding Compliance Penalties

Without up-to-date energy consumption data, there is a risk of misreporting for a given period. In turn, there may be penalties. Non-compliance is undesirable enough when the data is actually correct – let alone when your emissions were in fact within the right limits. (Our platform is designed to ensure accurate Scope 1, 2 and 3 reporting.)

Operational Continuity

Businesses sometimes face the risk of unexpected downtime due to billing errors. This can occur when a company has been overcharged, hasn’t paid, and the discrepancy hasn’t been resolved in time.

One large-scale incident happened back in 2014 when New York’s Rotterdam Square Mall almost had the power shut off over the Black Friday weekend. The site’s typical utility costs came to $80,000 per month, but the National Grid claimed $300,000 was owed due to a meter the owner never knew existed when he purchased the site.

Bill validation prevents such things from happening – the extra charges would have been detected long before operations came under threat.

The Environmental Impacts of Invoice Validation

Energy consumption data gives companies a clearer understanding of their usage patterns through detailed reports on consumption by site, time of day, and many other variables. This knowledge is vital for implementing energy management strategies.

A report by the European Commission discusses the ROI of certain initiatives. In one case study, the UK Department of Energy and Climate Change used occupancy controls to optimise lighting and air-conditioning, ensuring they were only running in rooms when occupied – and only during the building’s core occupancy hours.

The investment cost €65,000 and reduced CO2 emissions by 49 tonnes per year. The annual cost savings came to €12,000, making the payback period 5.4 years.

Some initiatives pay off much sooner. For example, zone scheduling of exhaust fans and air handlers in a US hospital cost €68,000; with annual savings of €80,000, the payback period was only 0.8 years.

Knowing which initiatives will have the greatest impact depends on having the right data to begin with.

The regular monitoring of energy use also supports transparency and accountability, ensuring that all stakeholders, from employees to shareholders, are aware of the company’s sustainability efforts.

These reputational benefits have many implications – for example, companies may better attract younger workers that prioritise sustainability when looking for an employer. And of course, staying compliant will keep your company in regulators’ good books.

How Technology Improves the Accuracy of Energy Bills

Energy invoice validation software and energy data analytics tools can help organisations track and analyse their consumption in real-time, which enables them to address inefficiencies promptly.

These systems cross-check energy bills against actual usage data and contract terms, flagging financial discrepancies automatically. The time and labour required for manual validation is not feasible for large scale operations. Our invoice validation software, for example, performs more than 70 checks every month.

These systems also ensure that all energy-related data is consolidated and centralised, providing an overview of energy performance and facilitating efficient decision-making processes.

In Closing

Accurate invoice validation offers dual benefits of financial savings and environmental sustainability for large corporations.

Checking the correctness of bills helps companies avoid unwarranted costs and improves budget predictability. And the data gathered throughout the process brings many insights – from highlighting inefficiencies to assisting in the negotiation of contractual terms. And of course – it makes it possible to meet reporting requirements.

At Optima Energy, we don’t just provide the tools to validate your energy bills – with our Bureau Services, our experts can manage the invoice verification process on your behalf and provide recommendations. To learn more about our service packages – or to request a demo of our platform – contact us today.

Discover how one of the UK's largest water companies

SAVED £££

by using Optima energy invoice validation services

WATER COMPANY CASE STUDY

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Discover how one of the UK's largest water companies

SAVED £££

by using Optima energy invoice validation services

WATER COMPANY CASE STUDY

DOWNLOAD NOW!

Send case study to: