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Payment (Re)Conciliation in Offshore Oil & Gas Maritime Logistics

By Enrique González - Nautech de México

Founder and CEO

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The biggest concern in offshore oil and gas maritime logistics is collecting from customers, hands down. Once you have been able to collect from your customers, the next biggest concern is conciliating all those payments made by those customers, especially for companies with multiple contracts, government contracts and/or with multiple partial payments for each invoice they issue. Most of such invoices are higher than a couple of thousand dollars (paid in Mexican pesos at the exchange rate on the payment day, published by the Mexican Central Bank); therefore, the volumes of cash moving from one account to another are usually complex to manage. For example, PEMEX used to pay its suppliers using “adendas” or “budgetary tranches,” meaning that maybe one invoice would generate two or more wire transfers (SPEIs) to pay it. PEMEX’s current debt to its suppliers is as high as MX$270 billion (US$13.5 billion)t. That means, when those debts are liquidated, it will use some thousands of SPEI transactions to do it. How will those companies conciliate such payments?

On the other side, we have the financial industry, in which electronic payments are massively exploding in use by people and companies to pay for goods and services. Just between 2019 and 2021, transactions through SPEI (Interbanking Electronic Payments System) grew by 138 percent, from 837 million transactions in 2019, to 1.9 billion in 2021, up-to-date figures for 2022 show. “During 2015, 335 million transfers (transactions) were made through SPEI, for an approximate amount of 245 billion (millions of millions in Mexico) pesos. These payments include pensions, payroll and payments to government vendors,” according to a Bank of Mexico report.

Source: Banxico, SPEI statistics:

https://www.banxico.org.mx/SieInternet/consultarDirectorioInternetAction.do?accion=consultarCuadro&idCuadro=CF252&sector=5&locale=es

For a small company, it may be feasible and affordable to pay one or two people to conciliate those payments manually, using the bank statement and maybe a spreadsheet. However, when you need real-time reports about how your collection is doing during the month or quarter, you cannot leave that task to an analog tool. Even if you have a powerful ERP, the payment data must be uploaded to the ERP and that alone will take some time and effort. Furthermore, all those payments data will multiply into a lower amount (or value in $MXN) but more transactions in quantity, when customers pay their suppliers along the huge value chain of the oil and gas sector.

Over the decade that the fintech industry has been evolving within the digital environment, it has gone through a steep learning curve regarding the know-how of digital business. As in any new business model, such a learning curve is full of uncertainty and challenges. However, the value created by the digitalization of the financial industry has been caught mainly by the consumer, not so much by the corporate sector. This learning curve has also been full of improvement opportunities.

Easier access to credit, financing, more accessible terms and conditions, as well as swift credit analysis processes have been the outcome of the electronic payment revolution. But there have also been some investments. Today, the proportion of tech staff in banks and fintechs is growing by the minute. The amount of hardware used for the payments infrastructure and the cybersecurity of that data is massive as authentication rules and laws demand better authentication means. Nowadays, the challenge companies are facing is to move all that to the cloud. This doesn’t need to happen in offshore oil and gas, at least neither exactly nor in the same proportions. If companies in the oil and gas sector think smartly, the learning curve could be lighter and less expensive. It’s only a matter of trust and daring.

Using technology not only on their boats but also within their business model and their administration may open up a whole new world of efficiencies and shorter overheads for oil and gas companies. I am not talking about changing from a maritime company to a tech business, but to apply the best of technology to make their business a lot more efficient. Conciliating payments, either receivables or payables, could make a huge difference in the cash flow of any business, especially in an industry where collection (and therefore cash flow) is always at the top of the concern list.

Today, there are many software development companies, many of which have payment software as well as cybersecurity skills to offer innovative solutions based on the cloud or even offering SaaS platforms to make your payments (in and out) efficient in terms of conciliation. Less time and effort to pay means a lot in savings and financial health for the offshore oil and gas market. Leaving the world of (ridiculously) long terms of payments and evolving to agile payments in this industry will allow an easier conciliation of such transactions and will result in a reconciliation of the entire industry’s finances. Again, it’s not rocket science, it is just using the technology we have at hand in a creative way. The payment and platform revolution is here and offshore oil and gas logistics companies would be wise to find the best, and safer, solutions for their operational and financial troubles.

For more info about platforms that will help your company to operate, pay and collect better, please ask our team: enrique@nautech.com.mx.

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