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”