August is not my favourite month. It’s got nothing to do with bank holidays and traffic jams, or even the fact that I will be officially one year older.
Worse than all of that, August is the month when my car breakdown cover is due for renewal. A couple of weeks ago, my renewal letter arrived on the doormat with a heavy thud. No doubt weighed down with all the extra ink required to print a renewal offer 218% greater than (i.e. more than double) the previous year’s negotiated deal. Apparently, as a reward for my loyalty, I need take no more action. Simply sit back and let them charge 266% more than the best value equivalent from an alternative supplier.
The annual ritual has commenced. You see, being the canny financially-qualified Scot that I am, I have, for a number of years now, researched the market, compared policies, read copious amounts of small print, obtained quotes, and entered into negotiations with my incumbent breakdown cover supplier. Actually, I secretly enjoy it, even though I know how time-consuming it all is to arrive at a deal which meets my needs at a price point that I’m happy to agree. I’m not necessarily seeking the cheapest price, but definitely want a cost-effective policy which offers a particular level of cover, free from dubious exclusions which could otherwise come back to bite in the event that I need to call upon the services of a tow-truck.
Steve Ray and Claire Power-Browne
We feel that one of , if not the, biggest advantages to working with Auditel is that we continually manage your supplies going forward. This includes, amongst other things, the tendering of your supplies independently, ensuring your billing profile is correct, ongoing bill validation and managing the renewal of your supply at the correct time.
Leaving aside the complicated variations between suppliers on notice periods to allow you to leave your contract without penalty, one of the most common issues we come across is that of the “automatic renewal’ letter which arrive towards the end of an energy contract from many suppliers. The letter warmly invites you to renew automatically by doing absolutely nothing. In fact the title of this article was copied from a renewal letter sent to one of our clients from a major supplier. Sounds great, doesn’t it? Particularly when there is so much else to think about when running a business or organisation.
All organisations generate waste of some sort. Often this is simply disposed of in ‘general waste’ bins collected weekly by one of the big national firms or a smaller local company. It’s one of those ‘necessary’ costs we can’t do anything about, or can we?
Terms and Conditions in the waste industry are often extremely strict and almost border on the unfair in some cases! The large national companies such as Biffa, SITA and Veolia all have a requirement to give notice when terminating a contract. The period of notice varies slightly between them but they all amount to the same thing.
SITA, for example, require the customer to give notice in writing, sent by registered mail between 3 & 6 months before the end date of the initial term or the anniversary of that date. Otherwise the contract rolls over for a further 12 months!
According to Ofcom, “A whopping £4.8 billion is wasted every year by customers being on the wrong tariff.” Why should this be? Why are so many customers apparently on the wrong tariff?
Established in 1994, Auditel, the premier cost and purchase management consultancy in the UK and Ireland, offers their experience. In this complex marketplace with a huge array of suppliers, tariffs, add-ons and equipment, it is clear that businesses find it extremely difficult to discover the most effective cost solutions. Laurence Knott, their Head of Marketing, says: “These days, we find that many of those responsible for purchasing decisions are turning to outsourced independent cost management networks like Auditel to help them. Mobiles are one of those areas where we are working with all of the industry’s major players.”
The imposition of hose-pipe bans in large parts of the country has highlighted the underlying problem regarding the need to better manage the UK water supply. The Water authorities are tasked with reducing leaks in the infrastructure in order to reduce wastage, although this is partially funded by above inflation increases in water charges.
The water industry has been theoretically deregulated in England and Wales, in reality there are no alternative suppliers to the regional water companies, and therefore it is impossible to switch suppliers to obtain better terms, unlike the other utilities.
The alternative is for businesses to look for measurable savings in their water charges by implementing the following strategies:
All of us are guilty of not checking our bills thoroughly, take telephone bills for example. Each month they send us pages of itemised phone calls. When was the last time you checked that the rate charged for each call was correct? I would guess never. However you may check occasionally once you’ve read the below story.
In December one of the UK’s major telecoms networks* (they’re the ones that provide the infrastructure that underpins the bills you’ll receive from your Telecoms Service Provider**) had an outage. The effect of this was that the Service Providers billing platform thought that there were some very long phone calls, for example one lasting up to 35 hours at a cost of £125. That was the worst one seen by an Auditel consultant, but there may be others that were higher.
The error above was quickly refunded by the Service Provider without quibble, due to the nature of the relationship we have with them, but if the bills hadn’t been thoroughly checked the error wouldn’t have been spotted at all.
If you had spotted the error yourself would the call centre operator at your Service Provider have a) understood the issue and b) refunded it on the spot?
Do you have time or the processes to check your bills every month, then to the time to sort out the issue via a call centre in the Philippines (or other part of the world where English isn’t their first language)? If your telephone bill is several thousand pounds per month would you notice if it was £125 higher than it should have been?
* = BT Openreach, C&W, Gamma for example
** = Daisy, BT Retail, Talk Talk, Alternative Networks for example
Posted by: Laurence Fitch
We were recently delighted to be asked to review the stationery expenditure for a large UK based charity. With over 35 sites and an annual spend of over £170k on stationery this certainly was an interesting and challenging project. Our team entered over 3,000 individual line orders into our software for us to analyse the charities spend.
We have often said that the “devil is in the detail” and this project certainly showed that. When we reviewed the overall spending patterns we were surprised to see that despite the client previously negotiating a special “Charities rate” for some sites, the discount level applied by the supplier for these was less than that given to other sites in the group which were not flagged up as charitable status. Effectively meaning they could buy cheaper if they did not ask for extra Charities discount !
This only came to light as our specialist software allowed us to review prices and tariffs between sites. Thankfully, having identified the issues we were able to move the charity to a new supplier, with a fixed core list, offering savings of 30% compared to their previous supplier.
If you have any concerns about the value you are currently receiving from your stationery supply we would be delighted to discuss ways with you in which may be able to reduce your total cost of purchase.
Posted by: Tim Halfhead
There was an excellent piece in yesterday’s Mail on Sunday (The Enterprise Zone) about White’s Seafood and Steak Bar in Hastings which had received a letter from British Gas the previous month warning that their energy contract was soon due for renewal and that failure to terminate the contract within a 3 week renewal window would see them rolled over on to a two year contract at a kWh rate 47.7% higher than their current contract. With an annual usage of 76,000 kWh this would mean an additional £3,200 a year. That’s an awful lot of fish suppers!
British Gas had, however made an error as the business should have been classed as a micro-business as it has fewer than 10 employees. Legally, suppliers can only roll micro-businesses on to contracts of 12 months at most. White’s has, unsurprisingly, terminated its contract and taken its business elsewhere.
This point aside, the important thing is that the proprietors of White’s actually read the letter that they were sent and acted on its contents. I see so many companies who ignore these letters (and let’s face it some seem to be deliberately designed to look as boring and uninteresting as possible so that they get binned or filed as just another peice of junk mail) and then are startled to discover the new pricing that they are landed with which can include huge hikes in both standing charges and the energy cost. At Auditel, of course, we diarise contract renewals so that our clients never get caught out by this sort of thing.
A strange question at first sight, however quite a pertinent one due to the warmer than average winter we’re having and the implications this can have for some business energy contracts.
Many energy suppliers, particularly Gas, include in their contracts something known as a ‘Take or Pay’ clause giving pre-determined upper and lower limits that your consumption must fall within in order to avoid what are usually fairly punitive charges. i.e. Take what you’ve contracted for or Pay for it anyway.
The pre-set limits are based on your ‘AQ’ – this should be your average consumption over the previous 3 years or so. However we’ve often found this industry database figure to be wildly inaccurate and should be checked against your predicted consumption before accepting any contract. Your AQ becomes your contractual 100% of consumption and the limits are a percentage either side of this, with the limits differing from supplier to supplier.
A question for all those responsible for the payment of an organisations energy invoices:
Are you sure that you are only paying for the energy that you consume?
The reason I’m highlighting this is because we recently discovered that a new client of ours had been paying 900% over their actual consumption level for over 6 years on a gas supply! Despite the huge ongoing additional cost that this added to their overheads, the spend had seemingly not been so much as questioned, never mind investigated in that time. A new FD spotted something was wrong and managed to get £80k back themselves, however he recognised that he needed expert help to check if £80k was correct or not and at this stage brought us in, in much the same way that you would bring in a Tax Specialist
As it is the total refund came to over £210,000. This on an energy supply that should – on a competitive tariff at today’s rates – be costing in the region of £7,000 to £8,000 per year (and much less in previous years). A huge additional cost for an SME to bear, particularly in today’s financial climate.