Business Costs You Should Not Accept05th March 2017
I’ll tell you what drives me crazy.
This is where I let out my primal scream…..! (I’ll leave it to your imagination.)
- Creeping costs: These are little charges that get added to a bill you’ve already agreed to, just like the delivery charge above. Another example might be a supplier telling you once you were halfway through a project that an additional investment is necessary.
- Stealth price increases: All those regular expenses you pay such as electricity, gas and travel? The companies love to hike up your tariffs when you’re not looking.
- Additional costs you haven’t considered: This is your own oversight. For example, if you’re buying from outside Europe, you might forget you have to pay a duty. Similarly, if you are not organised enough to collect your goods promptly once they reach port, the port can charge you (“demurrage”).
- Suppliers passing on costs to you: One of our directors, Shirley, used to work for a Pharma company. If, when they imported their raw materials, there was a delay, they sent the materials by air freight instead of shipping them – and passed on that cost to the client.
There needs to be an approval process for all expenses, and every invoice needs to go through it – no exceptions. If you raise a £7,000 purchase order and the invoice comes in for £7,050, it needs to go through the approvals process again.
As the business owner, ask to see all invoices from the last three months and audit them.
Do you know what money is being spent on? Do any of the sums surprise you? Who’s approving what? Are existing procedures being followed? Are there any additional costs (such as demurrage) you seem to be paying repeatedly, which can be prevented?
Then ensure that someone is held accountable for every penny you spend.