Accounting practice in the energy sector: revenue recognition

Current revenue recognition accounting practices are too costly and diminish trust in the energy industry, says Richard Hill, Head of Finance at energy data specialist, ENSEK

The role of an energy supplier chief financial officer (CFO) might not be the most appealing in the current climate. Suppliers are under increasing scrutiny, with rising costs and poor customer service frequently in the headlines.

Yet beneath the headlines, energy suppliers have a huge opportunity to transform their finance capabilities, improve their balance sheets and the customer experience.

The current approach to accounting used by many firms in the energy industry can create financial uncertainty, disguise errors in customers’ accounts and impact the allocation of costs in the industry (a process known as settlements). Suppliers who redefine this approach can drive out unnecessary cost, risk and poor customer experience.