cost control Archives

Don’t let costs embed themselves in your business – go on a fossil hunt!

We looked at how costs and processes get embedded in a business and stay there, like fossils, for years and years, eating up cash, when they don’t need to be there at all!

This is a “physician – heal thyself” post about cost control and the processes that build up in businesses over the years!

Some time ago I ran a workshop for MDs about good financial management and one of the sessions looked at how costs get embedded in your business and stay there, like fossils, for years and years, eating up cash, when they don’t need to be there at all!

Fossilised costs, we call them.

They exist everywhere and sometimes you need to go on a fossil hunt and clear them out!

We had a fossil hunt several years ago when we had to move offices. Our landlord gave us a 100% rent increase and we decided to move out.

At which point we looked at what we needed in the new office, compared it with what we had and what it cost and thought “how did we let these costs build up without challenging them?”

In any business it’s worth standing back from time to time and asking whether you need everything you’re buying and whether you are buying at the right price.

Look at everything from people to premises, phones, stationery, storage, subscriptions and anything else you spend money on.

It’s not just cost control – look at processes and workflow too

Also, look at your processes and see if you can’t change the way you do things and be more efficient.

One outcome of our office move is that we decided to go “paper-free”. This saved a huge amount of time and money each year because we didn’t have to archive paper files and it led very quickly to putting our entire business into the cloud.

Costs and processes become habitual, “we do it this way because we have always done it this way”, and you take them for granted.

An expensive mistake. Check your workflow processes, increase profitability and make more money.

Cost control – it all starts with a fossil hunt!

Michael
Sales | Margins | Profit | Cashflow

Can we help you to reduce costs and improve your profits? Give us a ring on 020 7125 0270.

What value does an FD add – and why you don’t need one

This gives your business the best of both worlds – the senior financial input you need but without a full-time cost. It’s a solution that an FD would be proud of!

What value does an FD add to any business?

Broadly, there are four things a good FD adds to any business:

1. Financial information

No business can last for long without solid, consistent, up to date performance information that looks at:

P&L, compared with budget, last year, forecast
Margins
Debtors
Cashflow forecast
Client & product / service profitability

2. Financial controls and processes

Mostly, these are routines that happen every day, week or month and need to work like a well-oiled machine:

Solid bookkeeping that’s right, first-time
Frequent bank reconciliations
Robust credit control
Intelligent cost control

Without these processes and systems working well, the financial information required simply won’t be produced in a useful way.

3. Getting other areas of your business to be aware of financial issues and constraints

Ensuring that everyone in the business is aware of the financial dimensions of their job, particularly when making decisions.

4. Being involved in occasional and one-off decisions and projects

Investing in new assets, buying / selling businesses, promoting or recruiting senior staff, lease renewal. These are some of the issues that pop up from time to time and require experienced financial input. But they don’t arise every day.

All of this is important, so why don’t I need an FD?

The tasks listed above are either routine, day-to-day or monthly tasks or they’re occasional issues that pop up rarely. The routine tasks can be dealt with by good bookkeeping and accounting staff, or they can be outsourced.

The occasional issues are exactly that and don’t need an expensive, permanent presence to deal with them.

If not an FD, then what’s the alternative?

A far better answer for most businesses is to enlist the help of people like Blue Dot Consulting to act as a part-time FD to:

put in place the financial processes and controls you need
train and coach existing staff to do a more demanding job
ensure the right information, bespoke to your business (not the standard reports that you currently get from your accounting system), is coming out to those who can act on it
maintain an ongoing presence in the businesses to ensure that everything continues to run as normal
pitch in to the occasional decisions as and when required

This gives your business the best of both worlds – the senior financial input you need but without a full-time cost.

It’s a solution that an FD would be proud of!

Call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk and let’s have a free-of-charge chat about your business.

Michael

You can’t run a £1m business and only have your bookkeeping updated every three months!

Part time Finance Director

Chartered Accountants – Bedford House, Fulham Green, London, SW6 3JW

Is my accounting any good?

Towards the end of this burst of activity the accounting processes should be working on “autopilot” and everyone can concentrate again on delivering the profit and achieving growth potential of the business.

Accounting is so important to your business that you literally can’t afford to be getting it wrong, particularly as you grow. But if you’re not an accountant, how would you know if your accounting is right?

The focus here is on the accounting that’s going on every day, week, month during your financial year. If this is accurate and up to date then year-end accounts and tax planning should be as easy as falling off a log (so make sure your accountant is not charging silly money when you’ve done most of the work!).

But if the day-to-day accounting work is not being done correctly you can be in trouble and not know about it until it’s too late.

Symptoms of your accounting work being done badly might include:

late / no / incorrect management accounts
persistent cashflow problems
PAYE / VAT not being paid
suppliers forever hassling to be paid
customers taking ages to pay and not being chased

Of course, these could also be the symptoms of a badly run business with a finance team that’s on a hiding to nothing!

But let’s assume that yours is a well-run, profitable business with good growth prospects. If you’re seeing these symptoms then it’s likely that you’re being let down by whoever is doing your accounting work.

And that is something you need to change – fast!

What does the world of better accounting look like?

When we work with MDs to improve the quality of their business accounting it’s amazing how much anxiety and stress disappears pretty quickly. Particularly by focusing on improving cashflow and gross profit.

Often this type of work involves a short but intensive period of:

bringing the bookkeeping and management accounts right up to date
getting credit management working right through the business
looking at “pricing for profit“
cost control
improving processes and systems

Sounds like a good place to be?

Thought so.

Michael – @bluedotmichael

Tag: cost control