Introduction
Accurately measuring your business’ carbon footprint is crucial for making informed decisions about certain environmental sustainability aspects of your business and identifying areas for emission reductions.
By taking certain preparatory steps in your financial accounting software, you can ensure the highest possible accuracy when syncing your accounting data with Sage Earth Carbon Accounting.
Each line item of spend from your accounting platform is analysed using an Emissions Intensity Factor (EIF) to calculate your carbon footprint. To ensure transactions are accurately categorised and the correct EIF is applied, follow the practices in this article when entering financial data. This helps minimise the need for manual categorisation later.
Accurate categorisation of your transactions also improves the linking of spend and usage data within Modules. When transactions are correctly labelled in your accounting platform, they can be more easily categorised by the AI model and automatically linked to business usage activity - saving time and improving data consistency.
Enter detailed transactions
Avoid grouping costs of different categories together. Instead, break down expenses into individual items. For example instead of entering “Travel expenses” as a single line item, separately enter:
Hotel accommodation
Food
Drinks
It's fine to have multiple entries of different types on the same invoice but grouping them together in a single line will reduce accuracy. Each category has a different emissions factor, so detailed entries improve accuracy.
Use clear, specific descriptions
Our AI model categorises transactions based on their descriptions. Use precise terms:
Use “Petrol” or “Diesel” instead of “Fuel”
Use “Train travel” or “Short-haul air travel” instead of “Travel”
“Office supplies” should be “Printer paper,” “Ink cartridges,” “Stationery”
If you use internal codes such as SKUs (Stock Keeping Units), Stock codes or Manufacturer part numbers our AI may not categorise transactions accurately based on these alone. To improve results, include a clear, human-readable description of the item alongside these codes. This helps the AI understand what the item is, while keeping your internal references intact.
If you frequently purchase certain items and have them set up as products in your accounting platform, make sure each product record includes a descriptive name. This should automatically populate the description field on supplier invoices or payment records.
Ensure the correct description field is used
Your accounting software may contain multiple description fields. Sage Earth Carbon Accounting reads the ‘description’ field on supplier invoices and on payments not linked to a supplier (e.g. bank payments).
After transactions are imported into Carbon Accounting, check the Description field in the Transactions screen. This field - along with the supplier name and nominal code (your internal account/category code) - is used by the AI to categorise spend.
Include supplier details
Accurate supplier information supports better transaction sorting and categorisation. Make sure supplier records have a legible name and where possible try to sanitise records to keep the name field free from typos and avoid having multiple similarly named records that represent a single real-world supplier.
Nominal codes
A nominal code or nominal account in an accounting platform acts as the bucket into which transactions sit, which determine where in your chart of accounts, P&L and balance sheet these transactions sit. Depending on your accounting platform, these might be called a ledger account, general account or similar.
Accounts platforms usually come with a number of preset nominal accounts, and users can also create custom ones. Categorisation within Carbon Accounting isn't impacted by the numeric code of the nominal account or where it sits within your chart of accounts, but it is impacted by the nominal code name.
Use descriptive names
Where possible, use a human-readable descriptive name for nominal accounts for categories of similar purchases, such as 'Vehicle fuel', 'Office supplies', 'Building maintenance', 'Raw materials', 'Packaging' etc.
Avoid generic accounts
Often an accounting platform is pre-set to use a generic code like 'Cost of sales' for many purchases. These accounts don't have a name that aids in categorisation, and having many different types of purchase linked to them will reduce categorisation accuracy.
Try to find a balance between efficiency of processing items in your accounts package, and not funnelling too many different types of purchase through a generic 'Costs' or 'Miscellaneous expenses' nominal account.
Review data regularly
Conduct routine checks to ensure transactions are correctly categorised and described. This keeps your footprint data accurate and up to date. Establishing a routine for data review not only keeps your records up-to-date but also ensures that any changes in your business operations are reflected in your carbon accounting.
Utilise automation tools
Leverage automation tools to streamline data entry and ensure consistency. Tools such as AI Capture for Sage Accounting allow you to scan invoices or snap pictures, automatically entering the data for you. This not only saves time but also minimises errors in data entry, further enhancing the accuracy of your carbon footprint measurement.
Conclusion
By following these guidelines, users can significantly enhance the accuracy of their carbon footprint measurement when syncing financial data with Sage Earth Carbon Accounting.
Detailed data breakdowns, clear descriptions, the use of automation tools and regular data reviews are all essential practices for achieving precise and reliable carbon accounting. Implementing these practices will not only improve your sustainability reporting but also support your long-term environmental goals.