Your organization operates in a dynamic marketplace and has many moving parts, which makes cost control challenging. These four simple approaches can help you design and implement effective cost control strategies for your business.
1. Don’t operate in a vacuum
To strategize about cost control in a meaningful way, you need to gather data that will help you gain an in-depth understanding of spending in all categories.
The finance team should not do this in a vacuum, however. Enlist help and ask for input from all other teams who should contribute to — and will ultimately feel the impact of — new cost control measures.
This type of collaboration can produce positive results, from obtaining faster buy-in for cost control strategies to developing initiatives that will be easy to implement and for employees to follow. You’ll also position yourself as a business partner for your colleagues and avoid them being surprised by cost cuts and other budget decisions.
2. Shine a positive light on cost control
Cost control is an important part of business operations, of course, but no one likes to have their budget cut. Underscoring the positive side of cost control is therefore an important step in helping employees understand both the immediate and long-term benefits of these strategies.
For example, discuss how reduced spending in certain areas of the organization will free funds for acquisitions of new technology or other investments that will allow the whole business to grow. Or explain how green initiatives can help reduce energy costs while also benefiting the environment.
3. Evaluate spending for must-have resources
Suppliers: Depending on the size of your organization, consider creating a procurement team to manage vendor relationships. You may also want to develop an annual or biannual tender process to ensure you are forging collaborative relationships with the suppliers best suited to meet your business needs.
Technology: Work with your CIO and other IT leadership to assess the effectiveness of existing systems; identify opportunities to automate processes; and take advantage of emerging technologies, such as cloud computing, that can help reduce costs.
Staff: You’ll save time and money by taking a thoughtful approach to finding and hiring people who have the skills and expertise needed, and are likely to be a strong fit for your organization. Working with a staffing specialist can help you to be more strategic about the process and determine whether you need a full-time hire or interim help.
Also, providing professional development opportunities for employees can help your business to make the most of, and retain, valued talent — thereby making any investment in training and education a cost-effective measure.
4. Seek outside expertise
Engaging experts such as project cost accountants and financial analysts can provide you with quick access to specialized expertise needed to develop effective cost control strategies for your organization.
These professionals also can provide an objective eye, which can be extremely valuable when trying to decide where to rein in spending in the organization.
Keeping costs under control is an ongoing challenge for any business. Staying focused on results while maintaining clear objectives can make success more likely. Establish clear timelines for staff to set cost control targets and align the necessary resources to assist in outlining and meeting those objectives.
Also, consider benchmarking areas such as workforce management, accounting operations, financial systems, sourcing, internal controls and compliance regularly to determine whether your business is following best practices that can have a direct on impact on the bottom line.
- Cost Control: 5 Strategies to Consider
- A Crash Course in Cost Control Management
- 4 Cost Control Measures You Can’t Live Without
Did you know?
In 2015, the median cost — defined as base salary, bonus and benefits — of internal financial department staff in the United States is 2 percent of revenue.
Download Robert Half’s 2015 Benchmarking the Accounting & Finance Function report to learn more.