By Paul Giuffredi
Paul Giuffredi is a Finance Director of entrepreneurial companies. He has been Finance Director of PE backed, family owned and AIM listed companies in a variety of business sectors.
When you've just landed a new position there are a number of ways to make a good impression....
One that often gets overlooked is finding cost reductions in some of the less glamorous areas of company spend. This can be a good early win, especially if you're working for an owner managed or private equity backed business where cash flows are tight.
The main opportunities for these types of cost savings I have found in my Finance Director roles, have been insurance, utilities, computer consumables (toners), rates appeals, office consumables (A4 paper, pens), marketing print and courier companies. I've always managed to find savings of well over £100,000. It's nice to realise savings that pay most of your annual salary shortly after joining.
For the most part, the spend in the above categories has little or no impact on either customer or staff experience of the business. Often, inertia has led to the incumbent supplier not being challenged on cost for a period of time and price increases creeping through unnoticed.
One dilemma is whether to do the work in house or use the services of one of the many cost reduction consultancy firms who will contact you. Although you will inevitably be busy in your new role I would advise doing this yourself/internally as you could end up paying up to 50% commision on the savings made. Given that possible savings even in modestly sized companies can run into the tens or hundreds of thousands of pounds, this seems a laughably generous commission arrangement. Also your company board may question this level of cost for undertaking work they may well expect a good Finance Director to be able to do.
Going out to tender on consumables, print and couriers is not that time consuming and always leads to savings due to the cut throat low margin nature of these industries. With insurance, you want to find a good challenger broker to either win the business or make your complacent incumbent honest. For utilities there are plenty of websites who will find you a better deal at no cost to yourselves. For rating appeals there a number of national firms who want to charge you a large percentage of the 5 year saving on a no win no fee basis. This again could end up as an unreasonably high fee. You should be able to get a better deal from a local surveyor especially if they are providing ongoing services to your company. Aim to negotiate flat rate or capped deals for this work.
The savings you will make will boost profits and reduce any need to make cuts in areas which may hurt the business such as customer service.
Did you find this article helpful? Have you got an ideas to add to these? Have you recently been appointed as an FD or moved into a new FD role?
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