Welcome to the
Tuesday 17th February 2015
Looking After The Pennies
By Damian Lowry17th February 2015
Agenda
• Who are Auditel?
• Why is looking after the pennies crucial?
• What can you do to manage your costs?
• It’s not all about the rate
• Q&A
Who are Auditel?
• Network of approximately 200 consultants primarily focussing on cost management
• Established 20yrs, and now the biggest network in this field
• Work with larger organisations (typically >£1m T/O)
o Ltd /PLC’s oCharities
o Hotels o Schools
o Housing Associations o Professions (Accountants/Solicitors etc)
What do we do?
Specialise in the procurement and subsequent on-going management of more than 80 ‘non-core’ items of business expenditure including:
o Electricity o Gas
o Telecoms o Mobile communications
o IT o Stationery
o Waste removal o Document Storage
o Business Rates o LPG/Oil
o Merchant Card Processing o Water
o Janit0rial/Cleaning Supplies o Catering
o Fleet Management o Freight/Couriers/Haulage
o Print o Packaging
o Payroll Processing
Why is looking after the pennies crucial?
Sales £1,000,000
Direct Costs £700,000
Gross Profit £300,000
Overheads £200,000
Nett Profit £100,000 (10%)
£1,000,000
£700,000
£300,000
£180,000
£120,000 (12%) £120,000 (10%)
£840,000
£360,000
£240,000
£1,200,000
i.e. 20% increase in turnover to achieve same result
Know Your Contracts
• Typically utilities, telecoms, merchant services, print equipment, fleet
• When do they end? What is the window to terminate?
• Don’t rollover – take control
• Plan ahead
• Give responsibility
Look Back in Anger
• Carry out a historic audit on expenditure
• Have costs risen for no obvious reason
• 50% of invoices raised have an error on them
• Look for incorrect multiples (10x rather 1x)
• Claim back any overcharges
• Monitor regularly moving forward
Tender For All Major Spend
• Tender for all major spend regularly
• Work out what you need, what would be nice and what is irrelevant
• Include a Service Level Agreement
• Give a timescale
• Remember, price isn’t everything
• Look at trial periods with new suppliers
Benchmarking
• Ask yourself if you know how much you should be spending
• Just because you have always spent £x don’t assume that’s right
• Speak to peers, associates, other suppliers, professional advisors
• If you find you are above the benchmark, find out why
Sustainable Cost Management
• Make it a board level commitment
• Review regularly
• Don’t take your eye off the ball
• Have cost champions
• Reward people for good practice and good ideas
Some examples – its not just Rate!
• Income earners - paid £50k for metal waste collection/ now receive £20k pa
• Non usage – 30 telephone lines, 10 with either no/ small use
• Incorrect usage – Directory Enquiries/ Clock = 80% call charges
• Losses – company had 21 printers, paying for toners for 29!
• Faulty Meter – lighting a fish tank
• Not aware – swimming pool water!
Summary
• Know your contracts
• Look back
• Tender
• Benchmark
• Make cost management part of your routine
• It’s not just about the rate
“Q & A”