In oil and gas, suspense accounts are critical in ensuring mineral rights owners receive the royalty payments they are legally owed. By temporarily holding funds, these accounts protect stakeholders from legal and financial risks ranging from ownership changes to documentation gaps.
For operators, managing suspense accounts efficiently requires the right tools and technologies, including modern energy accounting software.
Why Might Disbursements Get Delayed?
Depending on the state or jurisdiction they’re operating in, oil and gas companies may be required to hold unclaimed revenue in suspense accounts for several reasons. For example, in the event of an ownership dispute, such as between heirs in an inheritance situation, a company might temporarily suspend payments until the dispute is resolved.
Missing or incomplete documentation, unclaimed royalties, gaps in reported data, stipulated check minimums, administrative holds, and regulatory and legal requirements can all lead to the establishment of suspense accounts. Additionally, varying royalty payment schedules may make it necessary for operators to place earnings in suspense until the next scheduled disbursement.
Best Practices in Suspense Account Management
Information Is Key
Maintain accurate records relevant to mineral rights, including ownership information, production volumes, and revenues. Keep all documents well-organized and easily accessible, and regularly review and update information, such as addresses, bank details, and contact numbers.
Practice Due Diligence
Proactively and transparently communicate with all stakeholders, informing them of any issues that could lead to suspense. Address documentation gaps and resolve title issues promptly to ensure the timely release of suspended funds.
Ensure Compliance
Adhere to all applicable state and federal regulations governing mineral rights and royalty payments. Understand how to differentiate between suspended funds and unclaimed property. Maintain compliance with guidelines for escheatment if funds remain unclaimed.
Leverage Technology
Utilize specialized energy software to securely and efficiently manage ownership records, mineral rights agreements, revenue, and additional information relevant to the suspense process. Select a platform that tracks payments, monitor production, and connects your teams in real-time, ensuring accuracy, transparency, and compliance in suspense account.
Your Reliable Suspense Accounting Partner
Managing suspense accounts efficiently can be challenging. At PakEnergy, we understand the complexities of suspense accounting. With bank-grade security controls, our robust, cloud-based platform scales to your business, delivering real-time data insights and seamless workflow integration that enable your operational teams to work faster and smarter.
Ready to discover how Pak Accounting can transform your O&G business? Book a free demo today and take the first step towards maintaining best practices in suspense account management.
Learn more about best practices in managing unclaimed property and suspense accounts. Watch our free webinar to see how smarter processes can reduce risk and improve compliance.
