Situation Choice Energy LP has provided retail and wholesale customers with a comprehensive source for market liquidity, price discovery, and market intelligence since 1994. Customers include multinational corporations, institutional banks, oil companies, utilities, and energy marketers.
As Choice Energy grew, the QuickBooks-based financial processing system used by the company quickly proved difficult to scale. The larger the company grew, the more cumbersome processing financial data in QuickBooks became.
“QuickBooks is an excellent financial solution for a small company. But, as our company grew in size and volume, we had to create multiple QuickBooks files to maintain operations-and none of these files could be linked together. This left us incapable of practicing traditional accounting procedures, and it complicated any type of reporting; whether managerial or financial,” says Scott Nesbitt, Chief Accounting Officer at Choice Energy.
Being unable to interface QuickBooks files left Choice Energy struggling to complete quarterly reports-and made monthly reporting impossible. All information for the company had to be aggregated into a Microsoft® Office Excel® spreadsheet, where it took several administrative employees two weeks to compile the data necessary to develop the quarterly reports.
In addition, the legacy system complicated the payment process. Choice Energy employs roughly 75 people-mostly brokers. The company’s brokers work directly with customers, acting as intermediaries to facilitate the sale and distribution of natural gas and power. The accounting process surrounding these transactions can be complex, and QuickBooks didn’t support the layered process for determining the proper commission for the broker. Explains Nesbitt, “Each deal has anywhere from one to four brokers, as such, we need to account for each transaction by broker. We report not only the revenue by broker, but also the corresponding collection by broker to calculate bonus payments. QuickBooks didn’t allow us to manage that reporting through our transaction cycle.” Choice Energy sought a business management solution that would satisfy the financial aspects of the business-including real-time reporting and its unique commission structure-while integrating with the company’s in-place operations systems.
Solution With the help of the NexTec Group, a Microsoft Gold Certified Partner, Choice Energy selected and deployed Microsoft Dynamics™ SL. This business management solution helps growing companies automate everyday processes and improve business operations.
Before choosing Microsoft Dynamics SL, Choice Energy engaged in an intensive selection process. The company evaluated five different systems, including SAP Business One. Says Nesbitt, “The other systems we looked at didn’t meet our criteria. We were really looking for a robust accounting solution that could interface with the other applications we were already using. Microsoft Dynamics SL met all our criteria and more.”
Eager to get the system up and running, Choice Energy asked the NexTec Group to plan, customize, integrate, test, and deploy Microsoft Dynamics SL in just five weeks. Meeting this aggressive timeline involved close collaboration between the two companies.
“We had a full-time dedicated resource working with Choice Energy, and he was able to bring in different employees as needed. Two things allowed this project to go live so quickly; the ease of customizing Microsoft Dynamics SL and Choice Energy’s intuitive, thorough knowledge of what they needed,” explains David Huether, General Manager at the NexTec Group.
Modules Implemented Choice Energy implemented multiple modules in Microsoft Dynamics SL to streamline the company’s financial processes. Members of the accounting team will be the primary users of the business management solution. These modules include:
General Ledger. This critical module captures and analyzes all financial data, streamlining routine accounting processes.
Accounts Payable. Using this module, Choice Energy is easily able to track and display money owed, due dates, and available discounts.
Accounts Receivable. The flexible invoicing options within this module allow Choice Energy to tailor invoices to fit its industry-specific and customer-specific needs.
Order Management. Tightly integrated with the financial modules, this module provides Choice Energy with the functionality necessary to track and manage its commission-based payment model.
Choice Energy, like most energy brokers, has many types of contracts and deals. The functionality embedded within the deal-capture side of the business needs to flow to Dynamics SL for proper revenue recognition and allow for the variable distribution of revenue percentages to various general ledger accounts. “Specific accounting procedures vary for each sales order type. It can be difficult to find an accounting solution that accommodates this complexity, yet Microsoft Dynamics SL does this out of the box,” says Huether.
Two things allowed this project to go live so quickly; the ease of customizing Microsoft Dynamics SL and Choice Energy’s intuitive, thorough knowledge of what they needed.
Choice Energy was also drawn to the “wild carding” feature within the modules, particularly in Order Management in Microsoft Dynamics SL. This feature allows Choice Energy to modify the billing process to fit their unique needs. Instead of establishing an individual breakdown of costs, Microsoft Dynamics SL allows the company to automatically allocate the order by customer or by item to customer specific accounting criteria.
“Wild carding is a critical and robust feature. Without it, we never would have been able to utilize Microsoft Dynamics SL and successfully convert to it,” says Nesbitt.
Customization The Customization Manager in Microsoft Dynamics SL enabled the NexTec Group to swiftly adapt the business management solution to match Choice Energy’s processes. The tool allows users to modify any screen within Microsoft Dynamics SL without changing the underlying source code. The NexTec Group was able to add new fields and controls, set defaults, and alter processes through this intuitive tool.
For example, the Order Management module was customized to track specific transaction information to help feed the commission process and to allow an invoice to be automatically generated. To accomplish this, display screens, drop-down boxes, and text fields within Microsoft Dynamics SL were all customized to lead users through Choice Energy’s specific processes.
Integration “One of the things that helped us recommend Microsoft Dynamics SL over other packages was its integration abilities,” says Huether. “We were able to integrate it with other systems, and because of that, Choice Energy automatically enjoys close integration with Microsoft Office Excel 2007.”
Choice Energy invested in operational software and wanted to integrate those products with Microsoft Dynamics SL. The multiple applications share data and information for a seamless user experience. Microsoft Dynamics SL is also integrated with multiple Microsoft reporting tools. The system works with both Microsoft FRx® and Crystal Reports 9.0 Standard to generate routine reports.
In addition, Microsoft Dynamics SL allows Choice Energy employees to easily export information into Microsoft Office Excel 2007 for analysis. Says Nesbitt, “One of my favorite reporting features is GL Transactions in the General Ledger in Microsoft Dynamics SL. The data downloads into Office Excel 2007 in a format ready for PivotTable® analysis. Within seconds, I can analyze data by transaction type, account, period, subaccount, or description.”
Benefits The energy brokerage industry is extremely competitive and commission driven. Brokers must maintain close relationships with existing traders and, at the same time, seek out new relationships to grow the business. Both require travel and entertainment expenditures. Microsoft Dynamics SL is uniquely suited for this business model.
The business management solution boasts multiple ledgers that allow Choice Energy to accurately track the brokers’ earned commissions, expenses, and detailed trader information. In addition, the move to Microsoft Dynamics SL enabled the company to increase reporting from quarterly to monthly.
Supports Transaction Process Choice Energy pays brokers according to the collected revenue they bring the company. Previously, tracking a deal was a manual process. The Choice Energy accounting team would enter and update this information into a spreadsheet. Now, using Order Management in Microsoft Dynamics SL, Choice Energy is able to automatically track the transaction cycle, recording where a deal is and when a broker should be paid. The Order Management module is also able to capture the two to four brokers involved in the deal.
“This is very industry specific. I needed to account for these details throughout the transaction process and report it internally. I report the revenue by broker, and then I report the collection by broker, which enables us to calculate payments,” states Nesbitt.
Reports Quicker, More Frequent The reporting structure previously used at Choice Energy was both infrequent and manual. By automating tasks through Microsoft Dynamics SL, it takes just two people three days to complete reporting, instead of taking several people two weeks. This increased efficiency enabled Choice Energy to move from quarterly reporting to monthly reporting.
Microsoft Dynamics SL enables Choice Energy to efficiently analyze data and generate financial statements in a timely manner. By importing data into Microsoft Office Excel 2007, employees can create a PivotTable that supports analysis by multiple criteria—period, transaction type, account, subaccount, and description. In addition, integration with Microsoft FRx allows employees to combine data from multiple ledgers for reporting on a single form.
“As far as I’m concerned, reporting is 99 percent automated with Microsoft Dynamics SL,” says Nesbitt.
Details Broker Activity Microsoft Dynamics SL also allows Choice Energy to create reports immediately to detail the brokers’ movements. The business management solution lets the company create unique subaccounts for each broker, customer, and trader. These multiple ledgers track a broker’s revenue generation coupled with their expenses and then combines this information through Microsoft FRx into a single report.
For example, Choice Energy can see, in real time, a broker’s commission and expenditures to determine if the net amount is acceptable. With the previous accounting solution, the company had minimal visibility into broker activity once a quarter-too late for proactive business decisions to be made.
“For any given day or time, I can quickly create a snapshot of how productive each broker is and see the expenses coded to their account,” says Nesbitt. “Having this timely, information, we can immediately react to low commissions, excessive spending, or both, as opposed to learning about it at after quarter end.”
Scales to Support Growth Microsoft Dynamics SL positions Choice Energy to acquire additional companies and grow without having to increase headcount. The automated accounting processes enables the small team that is currently in place to easily scale to accommodate the additional workload.
“Microsoft Dynamics SL lets us reduce overhead while growing the company,” says Nesbitt. “We can add three more companies and not add an additional person to manage the accounting and reporting processes.”
Microsoft Dynamics Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.
