OUR BLOG

Hot Finance Topics for Business Leaders

Share on facebook
Share on twitter
Share on linkedin

Expense Control: A Mid-Year Check-in

As you get ready for the 3rd quarter, all eyes are focused on where things are coming in at in the current year compared to your budgeting plan. Just to complicate things, this is happening as many of you are building next year’s budget. So, where are things now? Are you on target, ahead or behind your goals for the year? I’m sure you know, but does the rest of the team? Everyone?

Expense Control On Paper Vs Reality

If you were hit with some unanticipated expenses in the second quarter, you know you’ve got to tighten your belt if you want to stay on track with your current year targets. Cancel cell phone contracts, lay-off employees, and forgo landscaping at your office building. It’s easy enough on paper but once you add in the reality that you can’t be so short-sighted that your reduced costs in the short run don’t leave you with fewer clients, an immature talent pool, or not enough stock to meet the Christmas demand. I’m sure those consequences weren’t in your business plan.

Keeping department and company-wide expenses in check is an essential responsibility of any manager… while you’re also increasing revenues and producing state-of-the-art in-demand services and products of course. Your job is a bit more complex than that but at its core, that’s what we all do.

Expense Control Tips

Companies are often tight-lipped about their financial performance, even among their own staff.  It’s not necessary to redact every detail to each team member but you may find that when you open up a little bit about how things are going, you’ll be surprised by the results. All too often managers (especially new ones) think they’re expected to come up with cost-saving ideas on their own when that’s just not the case.

One of the surest ways of pulling in the reigns on expenses during a crunch time (or anytime) is to involve everyone. Get their ideas. Get their buy in. And implement them. (Nothing deflates morale more than asking for input and not using it.) You’re looking at the Income Statement as a whole but try isolating a specific area for company-wide input to get some immediate results.

People like competition, even the friendly kind. Challenge everyone to submit ideas of how to reduce your company’s electricity expense this summer by a bold 15%. Suggestions might bubble up that are as simple as:

  • installing motion sensors on the lights in your meeting rooms
  • turning all computers and monitors off at night or
  • reducing the number of printers overall (you may find that the extra walk helps to reduce your paper costs too as people become more diligent about using electronic documents.)

Will any of these reduce the value you provide to your customers? No, they wouldn’t even know…unless you choose to applaud your team for their efforts in your company newsletter.

Review and Reinforce Your Expense Control Ideas

Some ideas are obvious winners to implement. For others, you’ll need to sharpen your ROI pencil to see what comes out on top. (Or better yet, have the person submitting ideas go through the exercise of calculating it.)

  • If you are a heavy payment processor like an insurance carrier, a decision to bring lockbox processing in-house could be a big boon for you …or it might not be worth the effort.
  • If the budget called for setting up dual monitors for everyone, will everyone reap the rewards of a nice productivity boost? …Or can you install them on a case by case basis without impacting that productivity gain or morale?

For the big picture view, nothing replaces using a solid analytics tool. It’s a powerful thing when you’re able to show how quickly employee-initiated changes impact your company’s outlook for the year. Sharing these results will keep the good ideas rolling in.

Which expense categories can your organization’s employees impact the most?

Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.