CFOs and department heads are constantly looking at targets, savings, and budgets. Leadership is thinking about where to find the dry powder if revenue goals do not materialise or if the budget is coming up short of stakeholder expectations for 2020. The good news is, there is a common area of a business that gets overlooked amongst medium to large corporations where simply maximising the best value from suppliers and developing processes for measurable cost savings could save over 20 percent of total non-core annual expenditure, leading to additional profit straight to the bottom line.
Uncovering cash flow within your organisation can yield many important benefits and enable your business to stay ahead of the competition, allowing you to reinvest in strategic growth. Whether you are looking to reinvest in staff, technology, marketing or new products and services, the extra dirhams you save today can help you achieve your goals for 2020 and beyond. Make sure you get ahead of the competition in anticipation of as much as $100 to $150 billion in foreign direct investment across a range of industry sectors, including financial services, infrastructure, construction, real estate, hospitality, tourism and transportation, thanks to EXPO 2020.
Hence, the focus should be on general, non-strategic costs such as telecommunications, energy, logistics, printing, utilities, office supplies, freight, courier and marketing expenses, mainly costs that are not the focus of professional pricing negotiations. Here are our top recommendations for how to uncover your own hidden cost savings:
- Negotiate with suppliers more effectively: you know your order history so use this to optimise pricing and delivery processes.
- Avoid unaccounted for supplier inflation prices: clients often miss price increases that have been implemented. For this reason, some suppliers can get away with unfavorable fees and terms. Have your finance or legal team review your contracts.
- Streamline supplier contracts: continuously confirm you are leveraging the software or service solutions you are paying for. Contact your provider to cancel any under-utilised solutions.
- Inquire about new industry innovations: the latest solutions and services tend to offer better value for time and money as well as enabling you to stay ahead of the competition.
- Monitor and maintain savings over time: You have to stay on it, set up at least a six-monthly review of existing agreements.
- Ask about supplier rebates: Many organisations are unaware of the financial rebates available to them. The type of supplier determines the type of rebate, this most frequently comes in the form of either marketing support or free stock commonly at 20 percent of annual billings. Make the most of your entitlement to reduce next year’s spend.
Staff in charge of procurement or purchasing have many responsibilities, as a result, core expenditures remain the focus. Rarely do they have the time, manpower or expertise to analyse the non-core expenses associated with the day-to-day operation of their business.
Despite the rush to the finish line for 2019, organisations should adequately prepare for what’s ahead in 2020. Asking the right questions, analysing data correctly and allowing ample implementation periods is critical to prolonged success. Keep the seemingly small details in mind to ensure your organisation stays ahead of the competition. The time is now to evaluate your opportunities to introduce a new revenue stream into your 2020 budget.