How do New Entities Benefit from Energy Accounting Software? 

Why is entity growth so important to energy companies?

Launching new entities is one of the most effective ways for energy companies to manage risk — both operational, financial, and regulatory. This is because it prevents a single underperforming project from disrupting the group’s balance sheet. 

In the UK and EU markets, growth is evident. In 2023, renewable energy accounted for 24.5% [2] of all energy usage, an 8.5% [3] increase from 2017. There’s no doubt that growth and innovation go hand-in-hand, another reason why new entity setup is crucial to the longevity of an energy company. 

Why is setting up a new energy entity so difficult?

There are several recurring headaches when creating new SPVs or subsidiaries, and most are caused by disconnected business systems. With each new entity, finance is hit with a wave of duplicated tasks that involve building structures already existent in the group’s accounting system.  

The key features of these builds include: 

• Chart of accounts 

• Reporting frameworks 

• Approval workflows 

• Segregation of duties 

Not only do these builds require meticulous setup to avoid later issues, but they also take excessive time, resources, and knowledge. The challenges become greater when entities are subject to different regulations and taxes, leaving finance to deal with disconnected business platforms, lengthy compliance procedures, and an over-reliance on manual processes. 

So, how can energy companies ensure their new entities are swiftly and accurately created? 

Multi-entity technology promotes seamless growth

Energy finance teams are often pressured to set up and maintain new projects, entities, and SPVs quickly, while maintaining tight controls to ensure complete regulatory compliance. By implementing energy accounting software, CFOs can leverage consolidated, multi-farm data management to drive decision-making. 

According to a report by NatWest and Boston Consulting Group, energy companies must place better technological infrastructure at the forefront of their business objectives. Andy Gray, Managing Director of Commercial Mid-Market at NatWest Group, states: 

The [Energy] industry needs to scale its infrastructure and technology, all of which will require finance. It’s clear that there needs to be greater collaboration between policy, regulation, and finance to enable this to happen. […] It’s vital the entire value chain works together to make this happen. [4] 

The technology that Gray alludes to is energy accounting software. His vision of aligning finances and regulations also supports the creation of new SPVs, mitigates risk, and enhances controls for energy finance teams. 

Energy CFOs who invest in modern energy management software deliver faster SPV setup. By leveraging a multi-entity software solution with a hierarchical structure, a group energy company ensures that all other entities follow approved controls for seamless group consolidation.  

Structured multi-company workflow is more important than ever with the introduction of stringent carbon reporting and Environmental, Social and Governance (ESG) standards. 

Future-proofed technology for scaling companies 

The energy industry is growing at a rapid pace, with no signs of slowing. In a commercially-minded sector where timing is key to survival, the right accounting platform can make or break an energy company’s success. 

CFOs who invest in Xledger’s energy accounting software support entity growth, group financial insight, and regulatory compliance. Get in touch with our dedicated team to learn how Xledger can streamline your business’s cross-border and cross-currency growth.