The Guardian headlined recently, ‘Balancing the books. In coming years state school finances will be affected by funding changes, the end of a staff pay freeze and a rise in the pupil premium. With the economy continuing to flatline and the government struggling to control a growing national deficit, these are tough times for schools.’
The same is true for the independent sector. The Telegraph reported: ‘Everywhere, efforts are being made to keep costs down to make schools as attractive as possible. Some have gone so far as to advertise discounted fees.’
Chris Allison is Managing Director of Auditel, the UK and Ireland’s leading independent cost management consultancy. He explains: ‘For schools and colleges, managing costs is an uphill task without dedicated, professional help. These can be as diverse as utilities, catering and stationery, let alone finding the time to keep on top of contract renewals and seek out innovative cost management solutions for education ’
Since 1994, Auditel has built a reputation for delivering ethical and sustainable solutions for the educational sector through their Total Cost of Purchase®. This approach is now widely regarded as the most effective approach to cost management and Auditel regularly delivers results that not only meet, but exceed clients’ expectations.
Allison says that all educational establishments can be helped. He provides examples of savings for a pre-school day care provider, a secondary school and a college.
Pre-school day care:
Established in 1983, Busy Bees are the UK’s largest provider of pre-school daycare, offering more than 11,500 children’s nursery places in 129 unique locations nationwide. Their FD, although sceptical about the Auditel proposition, agreed a trial project to review water charges across all the sites. Over a six-month period, Auditel were able to recoup over £45,000 worth of rebates and identified ongoing annual savings in excess of £14,000.
As a result of this exercise, Auditel were invited to investigate the existing contracts with their telephone supplier and a shorter 2-year agreement was negotiated to deliver a common end date. The annual additional saving is estimated at £18,000.
Auditel was also asked to assist with a disputed final electricity bill. The result was a 90% reduction in the charge and a refund cheque from the supplier. As their IT Manager reveals ‘Having strong control of our costs going forward is essential. Outsourcing expert advice has paid off, both in terms of savings and providing the in-house team with additional management support. I would be happy to recommend Auditel to any company wanting expert help to review their expenditure.’
Founded in 1864, Framlingham College is a co-educational boarding and day school for pupils aged 13-18 in Suffolk and has approximately 425 pupils. Dissatisfied with their previous consultants, their Finance Director saw in Auditel the opportunity to have their complex cost management handled professionally. This saved them a considerable amount of time and money. ‘I invited Auditel to look at our utilities costs. We knew we had not been getting best value from the previous firm of cost consultants and that there were better deals out there. We simply didn’t have the time, knowledge or buying power required to access them.’
On utilities, Auditel delivered savings of over £95,000 and refunds for VAT and Climate Change Levy of over £60,000. A detailed lighting survey promised annual savings of £72,000, bringing total savings of £156,100. Their Finance Director concedes: ‘I hate to think where we would have been now, if it had not been for Auditel!’
St. Clare’s is an international residential college, which specialises in teaching the International Baccalaureate Diploma in Oxford. Based in 26 sites, the college presents an interesting challenge when it comes to cost and purchase management. Auditel was engaged initially by their Bursar to investigate the College’s spend on electricity, gas, water and fixed line communications.
In the first year, Auditel delivered savings which totalled over £42,000. Of these, electricity amounted to £31,250, including a rebate for past overcharges of £24,100. Gas amounted to £6,400 from historical overcharges going back three years and £4,200 (21%) on fixed line communications. Auditel have also provided significant levels of day-to-day management support in these areas.
Their Bursar concedes: ‘We didn’t have the time or the necessary expertise to sort them out. It was a huge relief to give these tasks to Auditel.’
Chris Allison adds: ‘There’s no doubt, our clients value the huge time-saving. In-house resources are freed up to concentrate on core activities. Budgets now contain up-to-date, accurate cost management information and we have become a trusted, outsourced member of their executive team. For any organisation wishing to have peace of mind amid spiralling costs, our Auditel Business Health Check can be an enormous benefit!’
‘Cost reduction and financial controls were among the top finance priorities identified by the Association of Chartered Certified Accountants’ and the Institute of Management Accountants’ Finance Leaders.’ Their recent survey revealed that ensuring cost reduction and financial controls are well managed, CFOs and other senior executives will be freer to focus resources on other critical matters.
At this time, with New Year’s Resolutions being made, it’s rare for the business itself to be considered. Auditel – would like to make its own contribution. According to the latest IoD survey, ‘business directors start the year with a far more optimistic outlook on the coming year than 12 months ago.’ As confidence returns, however, it’s important to avoid unnecessary expense. Minimise waste for maximum profits and ensure that overheads are properly managed.
Leading business magazine Forbes recently conceded: ‘A dollar gained in revenue is a very good thing …but remember, only a small portion reaches earnings. A dollar saved from cost, however, goes directly to the bottom line. So while focusing on the top-line, don’t forget to engage in a systematic approach to governing costs as a way to ensure long-term value creation’.
This month, the Charities Aid Foundation reported: “Fewer people are giving to charity and those that do are giving less, resulting in a £2.3bn real terms fall in total donations in the last year. Charities with incomes of less than £1m reported total combined deficits of £306m in 2011, compared with an overall surplus of £325m in the 2007 financial year.”
In 2010, Accountants Baker Tilly spoke about ‘managing charity finances through uncertain times’ and reducing costs. “A charity needs to assess whether its staff have the correct level of skills to carry out its activities. So whilst it is good news that charities are reviewing their cost base, the bad news is that 10% are making staff salary cuts and nearly a third are deferring projects.”
Chris Allison, Managing Director of Auditel, the UK’s leading independent Cost Management specialist, says: “At this difficult time, charities, like every other type of organisation, are looking to reduce their operating costs. But, in our experience, it is possible to retain valued personnel rather than having to rehire when things improve. Therefore, to accomplish this, charities need to take a really hard look at their business costs.
“However, we find it rare for a charity to have a full-time cost management specialist on their books. It’s a luxury that few can afford. The responsibility usually passes to other members of staff, many of whom do not possess the relevant experience and have more than enough duties already!”
Allison adds that as a result, some opt for what appears on paper to be the ‘cheapest’ suppliers. Adopting this purely headline cost-based model may seem logical, but it fails to take into account a wide variety of additional factors contributing to the overall situation. Thus, many organisations are spending far more than they need.
The Auditel Cost Management Consultancy is widely regarded as being the UK’s leading specialist in their field of saving money for over 3,500 organisations on over 80 business overheads. However, Auditel also provide a variety of additional services with their market-leading associates. These include funding, increasing cash flow, and even, record management which reduces the risk of misplaced crucial information.
Funding? If you are turned down by your bank, the advantages of using a broker to help have now become more important than ever. Auditel’s partner has access to a comprehensive range of finance facilities including commercial mortgages, leasing, factoring, invoice discounting and vehicle finance. They are sponsored by over 80 commercial financial institutions, including banks, building societies and factors which cannot be accessed by SMEs directly. Your Consultant can offer help to try and negotiate the best rates and terms for your business.
In September, John Walker, National Chairman, Federation of Small Businesses, said: ‘The message is clear – businesses want to grow and invest but they need a helping hand to do so. It is frustrating that bank finance is still difficult to get. More than 40 per cent of applicants have been refused in each quarter this year.’
Auditel can also deal with Research & Development tax credits to enhance your cash flow. These credits are the Government’s way of encouraging exciting new products and services by helping to reduce some of the financial risk for technology companies. But only 2% of the eligible UK organisations are actually claiming! Thus £540 million is being lost in Scotland alone. In fact, all manufacturing sectors are entitled, including Electronics, Food & Drink, Games, Mechanical and Industrial Engineering, Product Design, Software, Oil and Gas, Textiles and Printing.
Companies usually take the traditional approach through their auditors, but Auditel’s award-winning partner has recovered funds 10 and 20 times more. For example, a large confectionary manufacturer achieved a tax benefit of £25,000 through their accountants. Subsequently, the payback via Auditel’s partner was £338,000. One of Auditel’s consultants has saved clients over £1m in his short time with them.
Sometimes you may be in real need for some important documents. Why not store them all with Auditel’s worldwide ISO-certified partner. They’ll deliver them at any time day or night! So, whatever your business needs, contact your local Auditel Consultant. It could be one of the best calls you have ever made.
As the Group Operations Director of Pizza Express said: “This is one company that really does deliver and I would have no hesitation in recommending Auditel to any business. Anyone not using the Auditel service may be placing itself at a disadvantage.”
Cost management increases profitability by taking the heat out of the kitchen
Roast, a privately-owned restaurant, was opened in Borough Market, close to the City of London, nearly six years ago. Roast is dedicated to traditional British cooking using fresh seasonal produce sourced entirely in the UK. It has seating for 110 on two levels, and currently caters for between 2,500 and 3,500 customers per week, depending on the time of year. Since opening in 2006, Roast has added two takeaway outlets to their flagship restaurant: Roast to Go in Borough Market and Roast Westfield in Shepherd’s Bush.
Iqbal Wahhab, founder of Roast Restaurant, first came across Consultants Claire Power-Browne and Ravi Khakhria from the Auditel Cost and Purchase Management network at an Institute of Directors (IOD) event. The company were sponsoring one of the Director of the Year Awards. Iqbal was impressed by their service offering. He appointed them to run the rule over Roast’s business costs. Sergei Gubars, Roast’s General Manager and Wine Buyer, takes up the story. “Roast has been a success from day one. We are very busy and the restaurant is full, but I felt that we could probably increase our net profits by taking a closer look at our expenses.” Sergei liked the fact that Auditel did much more than talk a good game. “I was pleasantly surprised by Auditel’s approach. It was not at all aggressive. It was clear that they were experts at what they said they could do and weren’t afraid to go the extra mile.”
The Lady Magazine was founded in 1885 by Thomas Gibson Bowles, the maternal grandfather of the Mitford sisters, who wanted to create a “lite” version of Vanity Fair, which he had founded in 1868.Famous for its classified adverts, The Lady remains the first port of call for anyone seeking domestic staff, with vacancies listed for nannies, butlers and governesses. The Prince of Wales and Queen Mother are believed to have used it, and the Duchess of York famously once advertised for a dresser. The Lady is the oldest women’s weekly, and is thought to be the oldest magazine still owned by one family. It continues to operate out of a Victorian building on Bedford Street in Covent Garden, central London.
Ben Budworth took over as Publisher and Chief Executive in 2008. The famous magazine, which since the sixties had been owned by his uncle, was very run down and in desperate need of modernisation. Embarking on a crusade to revitalise this embattled brand, Ben turned The Lady, which had previously been a partnership, into a limited company, with his mother and siblings as shareholders.
Silver Springs Soft Drinks is the third largest, independent soft drinks manufacturer in the UK, based in Kent. With a workforce of around 140, they produce a number of branded drinks including such household names as Perfectly Clear, 1870 Mixes, Pulsar Isotonic, Fruit Squeeze and Stripes Cola, as well as many own brand drinks for major supermarkets. Formerly, Silver Spring Mineral Water Company, a fourth generation family business, it was bought out of administration in September 2009 and a new management team installed.
With over 200 specialists covering the country, Auditel can deliver its fully independent cost and purchase management services to clients in well over 100 areas of business costs. They were initially engaged by CEO Gary West at the time of the purchase to ensure continuity of the electricity supply for the new company. “Faced with an extremely precarious situation, including the threat of disconnection, a significant increase in security deposit and uncompetitive terms, we were pleased to call upon Auditel’s expertise. Their team worked with us to ensure a successful outcome. In the process they re-wrote the rule book with a major energy provider, establishing a way forward.”
On Friday 23rd September, the IOD’s Director of the Year UK Final Awards Ceremony took place at London’s Lancaster Hotel at a special celebratory lunch. The event is the IoD’s premier event in their calendar and once again attracted an abundance of exciting high-calibre entrants from across the UK.
Auditel, the UK’s favourite Cost and Purchase Management Specialist were delighted to be sponsoring the IoD Director of the Year (large company) Award again this year. They welcome the involvement in raising awareness and celebrating the very best of business leaders in the UK. The award was open to all Directors from FTSE and other large listed companies who have shown excellence in their own region.
At the ceremony, Wesleyan Assurance Society Chief Executive Craig Errington won the Award after securing the West Midlands regional award earlier in the year. He then went on to win the main overall title as 2011 Overall Director of the Year.
Craig said: “This is a tremendous honour and I am delighted to have won. While it is an individual award, directors are only as good as the team and staff around them which is why everyone at Wesleyan can be proud of this accolade.”
Miles Templeman, Director-General of the IoD, added: “I would like to extend my warmest congratulations to Craig. He is an outstanding winner and I wish him and Wesleyan Assurance Society more success over the years to come. He has beaten some incredible competition from across the country to win the ultimate accolade – UK Director of the Year.”
How Financial Directors can Regain Power Over Rising Energy Costs Impacting Their Organisations’ Profits
Wholesale energy prices have soared in the last six months as high oil prices continue, the Middle East is uncertain and the nuclear disaster in Japan causes concern. The major energy providers have passed these price increases on to their business customers. Many face energy bills which could be 50% higher than they were paying only two years ago.
In June 2011, the FT and The Economist Business Barometer Research found that leaders foresee the biggest risks to their businesses to be rising costs of oil, commodities prices and interest rates. This prompts greater scrutiny of their profit margins and higher expectation for financial directors to perform in challenging times.
In July, after a second major British energy supplier announced double-digit tariff increases, RWE npower reported: ‘Three hundred major and small energy user companies counted energy as a top risk concern, next to sales and legislation, in their Business Energy Index 2011. Only 66 percent said they had a strategy to manage it.’