Published by Marc Freedman on March 29, 2016
Most consultants that provide expense reduction and recovery services do so on a no-cost, no-risk contingency fee model. This means, if they do not find savings nor recover an overpayment, you do not owe them anything for their services. If an Expense Reduction Consultant is successful finding savings for your business or that you over paid for a product or service resulting in a refund, they will be compensated by sharing in that savings or recovery. A shared risk model as described above can be in your best interest as a business owner.
Be aware that this consulting business segment has very few standards. That said, we have found that on recoveries and cost reduction services, it is typical that the sharing percentage is almost always fifty percent (50%). As in all industries there are discounters that will charge less. In the research we have done, we found that the more successful consultants will not provide their services at a discount.
Recently, we were able to recover an overpayment of taxes for a company’s commercial real estate lease. The landlord simply did not calculate the taxes correctly resulting in a return of $16,548.00 in overpaid taxes to our client, their Tenant. After receiving the reimbursement from the landlord, we then shared in the success of that recovery with our client. Our client was elated and never thought we would be able to get the paid money reimbursed and was happy to send us a check for our share (50%) of the successful recovery or $8,274.00.
There are also times when reviews, audits and analyses of opportunities appear there may be savings opportunities or recoveries for clients. But in fact, it is later determined that the client is actually getting best pricing or has not over paid for products or services. Again, this is why it is best to hire an outside consultant that works on a contingent basis. If they find nothing, you pay nothing, thereby avoiding an unexpectedly large financial expenses.