Did you know you’re overpaying for some of your business expenses by about 18%?
You are not alone: most businesses are unaware that they are overpaying vendors and service providers.
We didn’t make that statistic up either. When we audit our clients’ expenses and identify areas for savings, we save them 18% on average. That is a substantial sum of money.
We created this guide because we frequently encounter business owners who are unaware they are overpaying for the cost of doing business and don’t know where to begin. Below you will find information on why you should hire an expense consultant, when is the best time to bring one on board, what questions you should ask before hiring one, and what expense reduction consultants are available.
There are numerous reasons why businesses consider hiring expense consultants, but we generally find that they fall into one of four categories.
- Businesses that want to cut costs
- Businesses that believe they are paying too much for supplies, services, and equipment
- Businesses that want to change or consolidate their vendors
- Businesses that want to take advantage of tax breaks
Regardless of your company’s circumstances, an expense consultant can guide you down the most efficient path to identifying new savings opportunities. Not only are they well-versed in the ways businesses overspend, but they also have relationships with numerous vendors and service providers, as well as knowledge of market averages for how much you should spend on a given type of service or supply.
If you want to see how much money you could save right now, we have a free spreadsheet you can use. Available on our website here and enter how much you spend each year on each category. You will gain immediate insight into how an expense reduction consultant, also known as a cost savings consultant, can help your business free up cash flow right now.
After discussing why a company might consider hiring a cost-cutting consultant, we’ll look at when they are likely to use their services.
When Should a Company Consider Hiring an Expense Consultant?
There is never a bad time to consider hiring an expense consultant, but certain situations and events make it more appealing or useful than others. This can range from financial difficulty to expansion strategy and everything in between. Some of the most common scenarios are highlighted below.
- When you want or need to grow your business but lack the cash flow to do so. Every business faces this challenge, some more acutely than others: you need to grow, but the funds aren’t available. This is especially true when a company acquires new customers or clients but has yet to be paid. An expense consultant can help you identify areas where you can cut costs, freeing up cash flow that you were unaware was available.
- When you are establishing your business. When they first start out, entrepreneurs and business owners face a unique cash crunch. You’ve probably heard the statistic that 50% of businesses fail within the first five years. A major reason for this is that cash flow cannot keep up with expenses. This is not because the business is bad or unprofitable. An expense consultant can assist you in lowering your monthly expenses, increasing your cash flow, and staying in business for a longer period of time.
- When you want to make sure you’re spending your money as wisely as possible. When some businesses grow large or acquire other businesses, they face a unique challenge: they have no visibility into their spending and are unaware of how much overlap there is between vendors and services. In one case, we discovered that a business used 54 different vendors for lawn care – and not just for lawn care in 54 different parts of the city. In these cases, an expense consultant will be able to identify vendor and service consolidation opportunities, as well as refer you to better services at potentially lower costs.
- When you’re going over your budget. Have you ever discovered a surprise you didn’t realize you were paying for or exclaimed, “We’re spending how much on that!?” A cost-cutting consultant will be able to determine how much businesses spend on average for a given service or spend category, reducing any outliers in your budget that you discover, believe you discover, or were unaware of.
- When overspending has a negative impact on your bottom line. As previously stated, your expenses can sometimes have a negative impact on your cost of doing business. A cost-cutting consultant will identify expenses that can be reduced, restoring profitability to your company.
Choosing the Best Consultant for You
How do you know if a consultant is a good fit for your company?
1. Inquire about how much they charge for their services.
Most reputable cost-cutting consultants operate on a contingency basis. They are only compensated when they save you money. After calculating the savings, they will take a percentage of the savings. The fee is determined by their credentials and experience navigating your contracts.
2. Determine if their expertise is relevant to your company.
Some expense consultants focus on specific types of contracts. Others cover a wide range of topics. When selecting a consultant, look to see if they have experience in your industry. If not, see if the topics they cover are relevant to yours. Expense to Profit has extensive experience in a variety of industries, including telecommunications, hospitality, manufacturing, shipping, and equipment leasing, as well as employee benefits, real estate fees, and energy costs, among others.
3. Look over their track record of success.
The best expense reduction consultant for you will have a long list of satisfied clients. You can and should learn more. Reviews are typically available on your consultant’s website. Take a look at them. This will give you a better idea of what to expect from your working relationship as well as how much money you can save.
4. Examine Case Studies
Keep in mind that your consultant only gets paid if they find you savings. That means that the more money they find, the more money you both make. This should motivate your consultant to find as many cost-cutting opportunities as possible. Depending on the size of the company, these savings can range from a few thousand dollars to millions of dollars.
Savings can be compared by reviewing client case studies. Here are a few examples of ours:
Commercial Real Estate: $196,450
Healthcare and Dental: $542,000 per year for a three-year period
Manufacturing: $350,000 annually
5. Inquire about vendor partnerships.
Some cost-cutting consultants collaborate with specific vendors. This can be advantageous in some cases, but it can also be a conflict of interest if they prioritize their vendors’ priorities over yours. Inquire about vendor partnerships and the terms of those partnerships.
6. How much of your time will they require from you?
How much of the work will be done by your consultant, and how much will be your responsibility? Consultants engage in a variety of work practices. You should request that your vendor walk you through their process so you can get a sense of how much work will be involved.
7. Cost-Effectiveness Analysis
Finally, the savings you will realize are determined by how quickly and thoroughly the consultant learns about your company and its needs, as well as how well they understand the pricing, policies, and practices of the relevant vendors and industries.
Expense To Profit
Expense to Profit is a consulting firm that works for you to reduce expenses.
- We work on a contingency basis and split all savings with you.
- We do not use preferred vendor partners. If you are satisfied with the service provided by your vendor, we will usually keep you with them.
- Our procedure necessitates very little effort on your part.
- We have a well-organized procedure.
- We have extensive technical knowledge of pricing and contract practices for a variety of vendors and services, including:
- Energy and utilities
- Mobile phone services
- Food service
- Equipment leasing
- Federal tax credits
- Real estate leases
- Medical supplies
- Manufacturing supplies
- Bank and financial fees
- HR and Payroll management
- And many more expense categories
Three Steps to Savings in the Expense To Profit Process
Step 1: Review, Audit, and Evaluate
- Are you getting the best rates possible? We have a large database of rate information and are aware of the best available rates. We are aware of what others are paying for comparable services.
- Are there any possible flaws? We frequently discover billing errors or overcharges, particularly in complex technical contracts. Worker’s compensation insurance, for example, can be quite technical, and mistakes are all too common. We have a track record of combing through the details and identifying potentially costly issues.
- Are you purchasing the correct package: Right-sizing contracts? We can also assist you in determining things like your actual usage. We can sometimes save a significant amount of money by adjusting the frequency of a service or the size of monthly delivery to your actual needs.
Step 2: Design, Implement, and Negotiate (Cost Reduction Program)
We organize and synthesize our findings. Overcharges, usage changes, billing errors, and/or technical improvements that are directly related to your company’s spending are prioritized. We then make recommendations and contact relevant vendors to ensure they are charging you the correct amount.
For each contract, we will negotiate the best possible terms. We rarely need to change your vendor to achieve significant cost savings. We can frequently save anywhere from 10% to 40% on each contract.
Every new contract’s terms are reviewed by you, and you make the final decision. You are under no obligation to make any changes.
We never compromise the quality or convenience of your services.
Read some real-life examples of how we’ve saved clients a lot of money:
- Savings on Hidden Mobile Contracts
- The Problem with Jargony Contracts: Worker’s Compensation Premiums
- What Should the Real Cost of Your Employee Benefit Plan Be?
Again, we can often find significant savings without switching vendors. We can, however, connect you with new vendors when necessary. We know what things should cost and what your competitors are paying because we have negotiated thousands of contracts. Once all of this is in place, we will assist in training your team on new financial protocols.
Step 3: Measure, Track, and Save
You will begin to see savings right away, but we will check in every few weeks to measure and ensure that they continue. If something doesn’t look right, we fix it and keep an eye on the situation. As your needs change, we assist you in re-strategizing and renegotiating, resulting in greater savings over time.
When Hiring an Expense Consultant, Make an Informed Decision
Hiring a cost-cutting consultant can save you hundreds, if not thousands, of dollars per month. Make sure you’re working with someone who will go out of their way to understand your business, knows the ins and outs of your industry and services, and wants to be your long-term partner.
We would be delighted to speak with you about our services. We are proud of the results we achieve for our clients and enjoy developing long-term relationships with them.
We’d be delighted to hear from you.
Phone: (240) 406-9075
Email: [email protected]