All lines count-that’s the bottom line!
Are you doing your due diligence and challenging every line on your P&L- no matter how big or small?
Often at Distrabute, we see many businesses and business owners so heavily occupied and focused on keeping their business running smoothly, and looking for ways to grow their business, that they overlook the opportunities that exist in their current spend lines on their P&L.
By not regularly reviewing rates with suppliers against current market rates, and challenging your suppliers, often businesses are leaving money on the table. And by rates, we’re not talking about FOB rates or the prices you’ve negotiated with your suppliers to buy and sell your product/s, we’re talking about all the other costs that make up your business.
Things like, freight rates (both national and international), MHE (manual handling equipment), labour hire costs, stationery and packaging costs, IT costs, staff amenities, rental costs, and the list goes on..
To do this takes time and staff away from performing their normal day to day roles, however in many cases, we’ve seen that the benefit of this can far outweigh the benefit of picking up another ‘5 new major customers’.
Growth and bottom line improvement isn’t just about growing the top line and bringing on new customers, of course this improves sales and is important, however this can all be eroded very quickly if the back end isn’t buttoned up and operational spend water tight.
As business owners, or senior managers in charge of relevant business units, here a few questions to ask yourself;
When was the last time you went to market to review and challenge your operational spend lines?
Do you know how your rates compare to market and what the potential opportunity looks like?
Has your business grown over the last years where spend with suppliers has increased, however you haven’t challenged your new buying power?
Are you clear on the charges that make up your weekly/monthly supplier invoices, or are you too eager just to sign and get rid of the paperwork on your desk, and appease the AP team?
Do you find the supplier invoices hard to validate against and in some instances hard to follow?
For freight costs, are you clear on the make-up of any surcharges as part of your invoice and what they relate to?
Do you know how to conduct and structure a RFP/ tender to get the best outcome for your business?
Cost reduction is no doubt a term mentioned regularly in boardrooms, however often businesses don’t have the expertise or bandwidth to be able to do the above properly and squeeze out every single line on the P&L.
Don’t fall for the trap and adopt the mindset that you’ve been a long term customer of the supplier therefore you’re being looked after and are getting the sharpest rates and best service- suppliers love customers like you!
Whilst many of you may have answered no to a lot of the questions above, the good news is, you can still do something about it.
The bottom line is… all lines count!