One of the most complicated parts of running a TPI sits around commission payments. Creating a forecast and reconciling supplier commission payments is a very complex process due to the varying payment terms from supplier to supplier. Not every TPI has the luxury of having a CFO in place that can help manage this process.
Here are our top 5 industry pain points:
- Managing cumbersome spreadsheets – Excel is a great place to store commission payment information for those first few deals. However, your spreadsheet will quickly become filled with data, difficult to interpret and slow to open as more and more deals are added to your list.
- Synchronising sales & forecasts – One of the biggest problems for TPI’s is storing information on deals in multiple different places. When a deal is won you need to update the Ops team who will then have to provide all of the information again to your accounts team. It’s likely there will be two or three different systems where the same data will need to be re-produced. It creates huge inefficiencies within a TPI but, more worryingly, deals get lost in translation. You sometimes only end up finding out about a signed contract once you receive a self-bill from a supplier saying they want to make payment for the meter in question.
- Getting paid on time – Many TPI’s collect payments purely on self bills from suppliers, never questioning whether they have been billed for all the meters they were expected to be billed for. The reason for this is that the TPI doesn’t have the time or systems in place to pro-actively check off their portfolio for payments. Suppliers frequently under-pay or don’t pay at all for meters within a TPI’s portfolio. This creates a huge issue with cashflow, especially if the TPI is paying out commissions to agents prior to the contracts going live.
- Reconciling actual payments – Regardless of the payment terms in place, by the end of a supply contract the TPI will have been billed an amount of money by the supplier. The TPI should be checking the billed amount against the original tendered forecast amount to see if the payments are in line. Thousands of pounds can be collected from suppliers if queries are pro-actively raised with them on commission variances. Again, many TPI’s don’t have the systems in place to track actual payments against forecast easily.
- Reconciling payments based on the consumption period – The way suppliers bill isn’t consistent. Most of the time they will only release commission payments once the end user has paid the supply bill. This creates situations where a TPI receives a large payment in a certain month. But this payment is for a two year period that a meter has used energy against. Initially, it’s a great cash windfall. However, when it comes to financial year end, an auditor will expect the TPI to be able to prove how this payment has been reconciled into their books based on when the meter used the energy. If this information hasn’t been reconciled on the fly then putting together end of year accounts becomes much more arduous and inefficient than it needs to be.
The UtilityClick system has an industry-leading Finance module, that instantly creates global forecasts, reconciles supplier payments and empowers the TPI to keep track of what they should be paid and when.
In brief UtilityClick:
- Instantly creates global forecasts
- Reconciles supplier payments
- Data is presented in a clear, easy to understand format
- Provides complete visibility of payments and commissions
- Manages cashflow much more efficiently than using spreadsheets
- Enables the identification and claim of unpaid commissions
Feel free to get in touch if you would like a demo of this module, we’d be very happy to show you around the system.