Who squandered £194bn?15th April 2016
Apparently we all did! In 2015 British Institutions wasted a massive £194bn
A new CIMA (Chartered Institute of Management Accountants) study put cancelled projects at the top of the waste heap followed closely by over-payment for goods and services and unnecessary purchases.
The frustrating thing is it’s so simple to avoid most of that waste…
It isn’t rocket science…
it just takes a few simple controls and procedures…
and a slight culture change from everyone in your organisation.
‘Waste not, want not’ isn’t just an ‘old fashioned’ phrase my dear old Nan would say. It was a habit that was learned the hard way when most of the world was in turmoil and everything was scarce.
It was a thought process for every discarded item and every purchase made
Do I need this? Is it the best price? Is it more cost effective to repair or replace?
That thought process is just as applicable for UK business today.
The lack of a ‘cost-conscious culture’ is a real threat to UK competitiveness.
We don’t expect organisations to re-use tea bags or dig for victory but we do strongly suggest you put in place a strategy to drive cost competitiveness.
Take a sensible approach and you can’t go wrong.
Here’s a few simple suggestions to get you started…
- Stop and think before signing and spending. Your cash is committed at the time of placing an order not at the time of signing the cheque.
- Question purchase orders. As the owner of the business you can’t always approve every purchase order raised but it’s important that you do see them from time to time. Knowing they may have to justify the expenditure to you will influence your teams cost-conscious culture.
- Understand what the expenditure is for. Be certain you fully understand contract periods and cancellation policies. Utility providers are notorious for lengthy notice periods.
- Approved suppliers. Suppliers can become complacent and prices can rise if left unchecked. Ensure they are still competitive.
- New or repairable? Do you need to replace it with a new one? Can it be economically fixed or is it still under warranty?
- Discount. Have you tried asking for a discount on the price?
- Encourage everyone’s feedback. Everyone in your organisation can influence cost savings. Ask them for suggestions on better ways to do things. It might make savings in terms of time spent doing jobs.
- Review regularly. Are you sure of what all your expenditure is for? Are you still paying a Direct Debit for a magazine subscription you no longer need?
Just think what could be achieved with an extra £194bn if we all played our part!
What savings can you make and what would you rather spend that money on?