Is your company's expense management efficient? Let's talk about smart and sustainable actions and solutions.
Managing expenses efficiently will certainly improve your business margins. Every manager should always keep in mind: is my internal expense management policy generating the expected results? Are employees at different levels fully aware and engaged? Are we aligned with market improvements?
Companies usually channel their efforts towards achieving their goals, whether for growth, diversification, M&A or even to finance specific projects. However, there is not always a healthy interface with cash disbursements resulting from emergency actions that are unstructured and have short-term effects that do not reflect the seriousness and depth that expense management needs to have.
It is important that each area, and the company as a whole, develop Efficiency Strategies, whether financial or operational, following important topics to consider.
Information
Data processing is essential for any management, this is a known fact, but maintaining an analysable standard and consistency tests are essential for conclusions to be reliable.
Large volumes of information do not always receive the necessary attention. The Procurement, Logistics, Facilities and Technology departments have a lot to contribute with crucial data for management, allowing spending patterns, suppliers and opportunities to be determined. It is hard work that not all companies can afford to do internally, as it requires focus, specialisation and a lot of time, but it allows for critical analysis. It is worth considering external help from a consultancy dedicated to efficiency.
Listen to your employees
Your employees are the main agents in this process, as they are the ones who experience the daily demands first-hand and contribute realistically to the diagnosis, because the more realistic it is, the more efficient the solutions and strategy applied will be. Most importantly, however, is commitment and engagement, as they feel valued when their ideas and opinions are considered by the company's senior management.
Create realistic goals
A company without goals is like a rudderless ship, but it is important to create realistic and achievable goals so that it does not become a list of demands.
Operational efficiency should be a high priority on the agenda, considering time and resource constraints.
A well-structured Strategic Plan is essential for goals to be consistent, even if they are aggressive, as the challenge to be achieved is part of the team motivation process. A cost management and optimisation policy should also be part of the context of the goals to be achieved.
Action Plan
Let's get to work, it's time to put everything that has been planned into practice. To do so, it is necessary to pay close attention to establishing responsibilities, deadlines and necessary resources. It is also important to establish the correct frequency for "accountability" for all those involved.
Be prepared to "correct the course" and reassess specific points if necessary, as you cannot lose sight of the main objectives.
The integration of these actions is essential to permeate cost optimisation and operational efficiency policies, as good results must be disseminated to convey strategic importance with an emphasis on continuous awareness.
Invest in communication and recognition of achievements
It is important to invest in objective and motivating communication to disseminate results.
Recognizing and disseminating the objectives achieved, and how this happened, encourages employee commitment and reinforces the efficiency mindset that should be disseminated throughout the company.
Care with cash disbursements
Company policies regarding suppliers and external service providers play a decisive role in the pursuit of operational efficiency and expense optimisation. Some points to highlight:
Supplier qualification
Every purchase or service contract must be preceded by a careful assessment to ensure the operational security of the transaction, and even more attention must be paid in the case of recurring or long-term purchases/contracts.
It is not enough to simply check the usual registration details; all other requirements regarding supply capacity, technical certifications and quality/service levels must also be verified in accordance with each need.
Price is not everything
It is quite common to seek the best price, but any good negotiation should consider a good balance between service and quality levels (neither above nor below what is required), deadlines and other formal aspects (e.g. certification requirements, guarantees, etc.).
Relationships are fundamental
Do your suppliers feel secure negotiating with your company? We must cultivate an objective and healthy relationship with suppliers, respecting their policies and objectives.
Stable relationships with suppliers generate mutual commitment and certainly result in cost optimisation and operational efficiency. On the other hand, always keep your supplier portfolio up to date by seeking out new players in the market; after all, competition between them can be good for your business.
Create an efficient purchasing process
Purchasing management is fundamental to negotiating with suppliers. Internal processes must be structured to meet each demand in a specific manner, at different monetary levels. The purchase of items or contracting of services related to the company's core business must involve senior management in predefined areas of responsibility in the validation/authorisation process.
Ensure that your request to the market is structured in such a way as to generate clear and detailed proposals for the items your company actually needs and, above all, that they are comparable with each other.
Whenever justified, make it an operational standard to sign contracts with suppliers. In addition to providing legal certainty, this allows you to build an important history of the entire process in case of queries or possible litigation.
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The ERA Group has a recognized methodology for operational efficiency and cost optimisation, with qualified professionals and solid experience in the field.
