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AuditelDavid Powell

How to add £40k to your bottom line

By 16th February 2011 April 17th, 2019 No Comments

In the summer of 2009 we were engaged by an Estate Agent with 8 branches and a head office to review their overheads (Stationery and Printer consumables, Merchant Card Fees, Telecoms, Electricity & Gas) and after the initial review we projected savings of £40k per annum on just £90k of spend AND a £7.5k refund.

This is a well run business yet we were still able to find savings due to our specialist knowledge and audit process.

For example, we were able to identify by talking to several different departments in BT that the client was paying for 4 telephone systems when they had only 1 and had been for 12 years. This wasn’t clear on the BT invoice which simply said “Maintenance Charges”. After many months of escalation, denials, departments we obtained a cheque refund for circa £7,500 which was about 8 years worth of charges i.e. greater than the 6 years than the Statute of Limitations Act says BT should refund.

Category Current Cost Alternative Cost Saving % Saving
Merchant Cards £21,000 £10,900 £10,100 48%
Stationery £18,600 £9,200 £9,400 51%
Telephony:
Landline Rental £10,000 £7,000 £3,000 30%
Calls £12,100 £7,400 £4,700 39%
Maintenance £1325 £0 £1325 100%
Other Savings £1,530 £0 £1,530 100%
Electricity £16,600 £10,600 £6,000 36%
Gas £5,000 £2,000 £3,000 40%
TOTAL £86,155 £47,100 £38,255 44%
Possible Refunds
BT Charges 7500

On the energy front the client had attempted to move over to Utility Warehouse because the distributor told the client that UW were always the cheapest; this is not the case and you won’t find anything in their literature that promises this. However only some of the sites had migrated because of course the incumbent suppliers were often mid-contract and hence objected to the transfer. This then meant that the client thought UW were managing this but they weren’t and some meters/sites had now gone onto rollover contracts (expensive!)

We’ve also spotted that one meter they are being charged for doesn’t even exist on the clients site and we are working on a 4 figure refund. This situation has arisen because there are 2 street’s with the same name but opposite sides of Leeds. The client has only been on site 2 years and the previous tenant was also paying for the non-existant meter – that will be a target client once we get the refund for this client.

We are now managing not only getting best rates but also their energy risk exposure by not securing all contracts on the same start end dates. i.e. a mix of 1 and 2 year contracts secured at different points in the year.

Merchant Card fees is a whole story in itself and will be subject to a future blog. Some very complex issues here, but also a simple saving if you know what to watch out for.

Landline Telephony – we’ve reduced the number of suppliers (mostly BT), cancelled lines that are no longer in use and moved them to a more appropriate tariff.

Stationery – the stand out highlight was that one site liked a particular yellow filing system where all the other sites used green sling filing. Our analysis showed that over 1 year that one branch bought yellow files to the value of £2500 (we could obtain the same files for £600) of an annual total spend of £19k, they were swiftly moved onto the same filing system all the other branches use.

Just one example of Overhead Management, not cost cutting or just buying cheaper.