5 Cost Reduction Ideas for Thrifty Business Owners

Good businesses are constantly looking for ways to save money and improve their bottom line, and most business owners would love to do that without having to cut employee pay or benefits. If you’re looking for non-payroll cost reduction ideas, here are a few below.

1. Waste Audit

Almost every business has waste and/or recycling expenses. These costs can add up dramatically at high volume or multi-location businesses. Furthermore, these costs have been rising at one of the highest rates per the government statistics.

As a result, waste haulers are relying more on ancillary charges to boost their bottom line. A litany of fees can dot even the simplest of waste bills. These fees can range from: fuel, environmental, overage, extra yardage, container maintenance, recycle recovery charges, franchise fees, delivery, exchange, swap out, snapshot, regulatory cost recovery, etc. The list goes on.

Changes to recycling markets in recent years have also drastically changed the cost structure and landscape.

Determining what fees, costs, services and recycling programs are valid and necessary for your business will help drive down costs in this expense category.

2. Utility Audit 

Think of a utility audit as forensic accounting applied to your natural gas, water, sewer, and electric bills. There are hundreds of tariffs and calculations that go into arriving at what your costs are each month. How do you know which ones are right and what you should be paying?

Furthermore, any time there is a human involved there is a chance for an error. In our experience we’ve found that over 95% of business have at least one invoice that contains a billing error. This can result in significant refunds as well as large and ongoing monthly savings.

One example would be a misapplied tax on your invoice. If you identify one of these keep in mind in many states the vendor should refund these back to the point of error. Do not accept a 3-month credit, or even the state statute of limitations (typically 3 years). These issues can take months of follow up with many road blocks being thrown up by the vendor, but if your case is valid the effort is often worth the refund you are owed.  

3. Telecom Audit

Consider conducting a telecom audit. Telecom expenses can spiral out of control over time. You should really audit your telecom expenses every single year. If left unchecked you will find overcharges, incorrect charges, and a myriad of services and lines you do not use.

Request a copy of the Customer Service Record from your vendor (you will likely need to submit Letters of Authorization with entity EIN #’s and account numbers to complete this request).  Here is an example of a very simple telecom customer service record.  Depending on the complexity of your organization these customer service records could be hundreds of pages in length.

From here you will be able to determine exactly what you are paying for and where the lines you are paying for go to. This is the only way to verify the accuracy of your telecom expenses and look for errors and overcharges.

Managing and staying on top of the various vendor contracts, expiration dates, rebates and promotions, and market rates can also yield substantial savings.  

4. Merchant Processing Fees

If you accept credit cards and receive more than $100,000 per year via credit card transactions you should be monitoring these statements each month. There may be significant savings hiding in the additional charges you incur.

Most business owners know credit card processing and charges well enough to know there is a fee associated with each transaction, and most are effective at getting a very reasonable base fee for that transaction. 80% of the savings we have historically identified come from the ancillary charges associated with taking credit cards. These charges can cost our larger clients tens of thousands of dollars each month in unnecessary fees.

If you are spending significant money in this expense category it warrants a close look and ongoing monthly audits.    

5. Property Tax Audit 

Consider conducting a property tax audit. Each time your property comes up for assessment the county has the opportunity to raise or lower your assessed value.

This can result in giant swings in your tax bill and as a result, giant swings in the net value of your property (and cash flow).

You should take time to look into these charges and assessments and see if there is an opportunity to appeal.

If you do decide to appeal the taxable value you will want to make sure you are armed with market data (both market comps of comparable properties as a well as other comp data. A local appraiser should be able to assist you here.) Be sure to apply as soon as the appeal window opens too. Most counties allocate a certain amount each year to reducing assessed values. Once that amount runs out it may be more difficult to win an appeal, even if your case is just as strong.

Summary

These are just 5 ideas for non-payroll cost reduction to get you started. If you decide you want to employ professional help we’d love to help out.  We’ve helped thousands of clients across the country save money with our risk-free, shared savings audits.  You can call us today or send us an email at info@costanalysts.com to get started.  

What is a Telecom Customer Service Record? And why you need to know.

What is a telecom customer service record?

If you are like most people you have never heard of or seen a telecom Customer Service Record (CSR).

A telecom CSR however, governs everything that goes into your actual bill. It’s the behind-the-scenes litany of computer-generated numbers and letters that outlines where your telecom lines are going, what rates they are on, and how your charges are determined.

The paper (or electronic) invoice you receive from your telecom provider tells you very very little information about what it is exactly that you are paying for.

You can only get access to the customer service records of your account by requesting them directly from the vendor. These CSRs can be thousands of pages long, depending upon your organization’s complexity.

Why a telecom CSR matters to you

Without getting access to and correctly interpreting the Customer Service Record, you will not be able to determine if the charges you are paying each month are accurate and efficient.

Here is a screenshot of a small section of a telecom CSR.

As you can see, it’s written in industry jargon and reads like a foreign language.

Understanding and piecing all of this data together is crucial to determining where efficiencies can be gained and where any errors/overcharges be identified and refunded.

Summary

As you can see, interpreting a telecom CSR is a bit like reading hieroglyphics. If you don’t have this expertise on staff (in our experience even large IT departments do not understand these) then you need a telecom cost-reduction audit to know if the money you spend in this area is accurate and cost efficient.

Electric Tariff Test – Can you calculate an energy bill?

Understanding your electric tariff is paramount to knowing how to calculate your electric bill. And calculating your electric bill is not as easy as multiplying your kWh rate * your usage.

We’ve posted a Duke energy tariff below and sample invoice. See if you can figure out what the total billed amount should be. The below information is all you need to arrive at the correct answer. The answer is posted at the bottom of the post, (no peeking).

North Carolina Industrial Service Tariff
Duke Energy Invoice

 

Click here to see the correct amount you should have calculated.  

 

 

 

 

 

 

What is a Telecom Cost Reduction Audit?

So what is a telecom cost reduction audit? 

A telecom cost reduction audit is where you have your telecom, wireless, and Internet expenses audited by industry professionals to verify your expenses are accurate and free from errors and overcharges.

At P3 Cost Analysts we apply over 100 years of combined expertise on our clients’ behalf to save them money on their telecom expenses on a risk-free/shared savings basis.  If we can find them savings, we share in them 50/50 each month.  If we can’t, then it doesn’t cost them a thing. 

How do we find savings? 

Specifically our telecom auditors are looking for things like:

Telephone/Data/Internet

  • Billing errors/savings opportunities
    1. Misapplication of tariff
    2. Misapplication of contract
    3. Double billing
    4. Incorrect application of surcharges
    5. Billing for disconnected lines
    6. Incorrect tax
    7. Non-removal of charges
    8. Cramming
    9. Slamming
    10.  Discounts not received or misapplied
    11. Contract rate
    12. Incorrect usage of lines/equipment

Why do you need a telecom audit? 

Telecom companies make errors on invoices all the time.  We find that almost 95% of our clients have invoices that contain an error.  Many of these can be quite large.  Anytime there is a human element to invoicing mistakes can be made and telecom companies are no different than others. 

Furthermore, below is a screenshot of one section out of a 60-page telecom customer service record we recently audited.  Being able to effectively read and interpret this document is the only way for you to truly know what you are paying for. 

And interpreting the customer service record is only one of dozens of things our auditors look at. All of our clients have IT and Accounts Payable departments monitoring these expenses every month for spikes in costs.  Yet we still find savings in 9 out of every 10 audits we perform.

If you or your staff don’t have the time, energy, or expertise to truly dive into and dissect your customer service records AND you have a desire to be cost conscious and to save money, then you need a telecom audit. 

Ok, so how is it done?

An audit is conducted by getting recent invoices (2-3 months of invoices for each account) for each location and a letter of authorization for each vendor. 

  • We review all the invoices and associated contracts for accuracy and contract/tariff compliance
    • We use the bills provided an online logins to look back historically at past invoices (as far back as 36 months in some cases) 
    • We conduct a thorough market analysis of options, providers, and regulatory requirements and compliance.
    • After 4-6 weeks we deliver our findings to the client for their approval. 
    • Once our findings are approved we spend the next 4 weeks implementing the savings measures outlined
    • Only once savings begin hitting the client’s bottom line do we begin to share in the savings.
    • We then monitor their invoices every month for accuracy and overcharges, ensuring savings stay intact and remain in place.

If you are spending over $1,000/month combined on your telecom expenses then you qualify for our risk-free, shared savings cost reduction audit.  Give us a call at 1-877-843-7579 or email us at info@costanalysts.com and we can get started for you.  

 

What is a Utility Cost Reduction Audit? And why it’s important for your business

When most people think of a utility audit they think it means finding ways to reduce consumption of energy or water. And while that is certainly a worthwhile endeavor that is not what we mean when we are referring to a utility cost deduction audit.

So what is a utility audit?

A utility audit is where we apply our 100 years of combined utility expertise on our clients’ behalf to save them money. If we can find you savings, we share in them 50/50 each month. If we can’t save you money, it does not cost a thing.

Specifically, our utility auditors are looking for things like:

Electric/Natural Gas

• Billing errors/savings opportunities

  1. Key punch
  2. Meter reading
  3. Demand based
  4. Incorrect rate application
  5. Incorrect tax
  6. Multiplier/constant
  7. Incorrect implementation of contract
  8. Incorrect application of tariff
  9. Erroneous fees and taxes

Water/Sewer

• Billing Errors/Savings Opportunities

  1. Key punch
  2. Meter reading
  3. Multiplier/constant
  4. Incorrect application of surcharges
  5. Incorrect meter usage

Why is a utility audit is important for your business?

In our experience, 95% of organizations contain an invoice with at least one error or overcharge. These errors can be quite substantial. This can result in lost money each month that could go directly back into your bottom line.

Industry tariffs, codes, bills, and terminology are all written in industry jargon. This makes it almost impossible for anyone to be able to confidently determine what they are spending. Just have a look at one example of an electric tariff to see for yourself.  And calculating what your costs are supposed to be is no cinch either.  You can try your hand at utility industry math here (we’ve yet to have someone get this right).  

Simply put, if you care about the money you are spending each month then you should have your utility expenses audited by a professional.

Ok, so how is it done?

A utility audit is conducted by getting invoices for each location and a letter of authorization for each vendor. From there we conduct the following series of steps:

• We review all the invoices and associated contracts for accuracy and contract/tariff compliance
• We conduct a thorough market analysis of options, providers, and regulatory requirements and compliance.
• After 4-6 weeks we deliver our findings to the client for their approval.
• Once our findings are approved we implement the agreed savings measures.
• Only once savings begin hitting the client’s bottom line do we begin to share in the savings.
• We monitor the invoices every month for accuracy and overcharges, ensuring savings stay intact and remain in place.

Summary

Verifying the accuracy of these expenses is difficult and complex.  If you value the money you are spending in this category you should have it reviewed by industry professionals. 

If you are spending over $5,000/month on your utility bills you qualify for our audit service.  Having been in the auditing business since 1991 we’d love the opportunity to perform our risk- free/shared savings audit and see what we can do for you. 

If you are interested please reach out to us at info@costanalysts.com or give us a call at 1-877-843-7579.