Arla Foods Automates to Improve Consistency and Frequency of Its Energy Taxes Reconciliation

Global dairy company Arla Foods has automated the reconciliation and settlement of its energy taxes, eliminating administrative work and human error and allowing the organization to complete the process – with greater accuracy – monthly instead of annually.

As part of its energy taxes reconciliation process, Arla Foods collects meter readings in Impero from its Danish dairies, along with the utility company invoice data in SAP. These numbers are then compared against the energy taxes that Arla pays up front to identify instances where the company is entitled to a refund.

Settlement of its energy taxes usually results in a refund of 600-700 million Danish kroner (71-83 million USD) per year. Automating and carrying out reconciliation monthly will ensure Arla Foods is able to file claims more regularly, delivering an immediate cashflow benefit.

Christel Møller Broch Jensen, senior accounting specialist at Arla Foods, explained that energy tax reconciliation was previously only done once per year because of a lack of resources to complete the former manual process.

“We have more than 30 dairies in Denmark. They could have between 10 and 100 meter readings each, so we couldn’t do it every month. It was impossible. There are so many things to go through, so many things to look into and compare that the only practical way was to do it annually,” said Christel.

There were also many corrections to the figures identified during reconciliation. When the process was carried out only once a year, this meant potentially going back through a full year’s numbers. By automating, Arla Foods can immediately compare the latest meter readings against the previous month’s to identify any anomalies that need investigation at the point the error is identified, reducing resolution timescales and effort.

The automation project also supports wider Arla Foods sustainability goals by helping to ensure energy is used in the most efficient way across its dairies.

Arla used Redwood’s finance automation software to automate the energy taxes reconciliation process. As well as ensuring greater controls and enabling its tax teams to reconcile and settle energy taxes on a monthly basis, Arla looks forward to capitalizing on additional benefits from automation. Notably, consistent and aligned meter reading collection across the company’s Danish dairies enables additional financial checkpoints to identify deviations in meter readings and SAP postings.

Find out more about the operational improvements Arla Foods is achieving with Redwood finance automation in this case study.