Keeping Business Cost Under Control - Practical Corporate Cost Saving Ideas

(I-Newswire) November 15, 2008 - The ugly truth is that every company is bleeding profits through a thousand little cuts. While it's comparatively easy to stay focused on high-dollar raw materials or the big annual healthcare insurance renewal bill, few CEOs, CFOs and Purchasing Managers watch the pennies. In these most challenging of times, let's consider some ways that watching the pennies could help your company save money in 2009 and beyond.

* Corporate Purchasing Cards: Placing a corporate purchasing card in the hands of numerous employees seems like a great idea upfront. Unfortunately, this often becomes the "black hole" of business expenses. Most of the clients I've worked with who use these cards simply treated "American Express" or "Corporate VISA" as a line item on the income statement and rarely, if ever, allocate the associated expenses. The theory is that if bosses review and approve expense statements, the purchases won't get out of hand. The reality is that your staff is buying a lot of items at full retail from multiple vendors in each category rather than getting volume discounts by shopping through a designated supplier in each category. Most companies wouldn't dream of letting buyers purchase raw materials or strategic components from five or six different sources. So why is it acceptable to purchase from multiple office suppliers, MRO suppliers, travel agencies, maintenance providers, etc?. P-cards are convenient, but they shield thousands of dollars of inefficiency and wasted money. Periodic auditing of P-card related expenses is recommended as it is often illuminating...but just as often humilating and scary.


* Association Discounts: Do any of your industry associations offer group purchasing discounts that your company can take advantage of? If you haven't explored these discounts, you should. While generally not the lowest costs available, these discounts can often get you an easy 10% off retail with a few clicks of a mouse or a signature and a fax. Sometimes it's as easy as asking. Typical association-related discounts are related to fleet services, insurance, and maintenance services, but can often include uniforms, restaurants, hotels, telecom and workers compensation premiums.

* Travel & Entertainment: What sort of policies does your company have on travel and entertainment expenses? Traveling staff are entitled to eat decent meals while on the road serving the company's interest, but if you don't have a per diem allowance for food when not entertaining a client you're probably paying a lot more to feed the troops than you need to. If employees are traveling on a corporate credit card, are they being directed to hotels in a specific hotel group to capture the bonus points for free future corporate room bookings? If not, you could be missing out on a lot of free nights for future trips.

* Utilities: There are lots of ways to reduce utility bills (and enhance your corporation's "green" reputation) through energy conservation. Motion sensors to turn lights on and off in places like rest rooms, programmable thermostats, company directives to shut down computers at night before leaving, upgrades of fluorescent fixtures and more efficient light bulbs, selling used corrugated packaging and styrofoam to recyclers – the list may not be endless, but it's pretty long. Ask your electric power company for an energy audit and recommendations on conservation tools. They might even help you pay for some of them.

From our experience, most companies spend 15-30% more on indirect operating costs than necessary. If you think your company is saving everything it can, think again. Cost management is a process that never ends, but the dollars you save and efficiencies you gain are real. Start watching the pennies and you'll see the dollars add up.


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Alliance Cost Containment
940 Monroe Ave NW, Suite 337
Grand Rapids, MI 49503

Company Contact Information
Max Friar