Beware Of The Air Conditioning Systems Con

The increasing use of IT equipment, the employees to operate them and the office spaces to house them has led to a surge in demand for energy efficient air conditioning installations.

Office complexes and retail outlets account for the vast majority of installations and for good reason too. Businesses need their staff to be comfortable for maximum productivity. In retail stores and outlets, temperatures are controlled for staff and customers’ benefit. The cost of maintaining optimum temperatures… well, that can get out of control and fast.

Do you know much about your air conditioning units?

Not many do. The bill comes in and it’s accounted for as energy, alongside the heating, and other utility bills. Most go about their business completely oblivious to the amount of money being thrown at energy suppliers that could be kept in the business bank account, just by having an economical air conditioning system running.

Given the climate of the UK, there’s really no need for all that much of a sophisticated system. We have cool temperatures most of the year, which allows for HVAC systems to make use of “free cooling coils”. With these, the air is drawn from outside, and then circulated to cool the indoors. The systems that waste energy don’t pull air from outdoors, but instead draw the heated air from indoors, only to cool it with a “fan” coil unit, thus wasting electricity.

There’s no point having your heating running to heat the air up, only to have your air conditioning system kick in to cool it back down again. That’s what causes energy bills to double. Yes, operating an air conditioning system can see your energy bill rise by 100%. Often is the case, it’s because of heating and air con competing to maintain temperatures.

It’s not always the system that’s at fault as it can be the installation. Energy efficiency with heating, ventilation, and air conditioning (HVAC) systems is best done with a dead band. That means that the heating and the air conditioning co-operate on the same network with a temperature differential between them for when they’re programmed to start and stop. They’re programmed to operate automatically to maintain a consistent temperature. They do need to work together, on the same network to prevent two systems competing, one heating, and the other cooling at the same time.

As a rule, air conditioning systems should not be operating in temperatures under 24^o C. Where the dead band comes in is when the heating is set to maintain that same temperature or very close to it. The Energy Saving Trust recommends a temperature gap (dead band) of 4 ^OC. This will prevent the two systems operating simultaneously.

For that reason, every air conditioning system must have variable operating temperature controls, otherwise, it would need manual oversight to operate, which would never be efficient for any business.

The Importance of System Zoning

Premises operating super old air conditioning systems are likely to lack this feature. System zoning is the most precise way to control temperatures indoors. And it’s pretty simple too.

The construction of air conditioning systems uses dampers. They open to allow air in to circulate it, and close when the room is warm enough.  It doesn’t matter whether it’s using free coil or fan coils to cool the air, when the temperature heats above the pre-set level, the dampers open and the system kicks in to reduce the temperature.

With zone controls, there’s multiple thermostats installed throughout the building, which are all connected to the systems control panel, operating the dampers. The thermostats monitor the temperature of different zones, allowing one area that’s heated to be cooled down, but not in other areas of the building where it’s not needed. For example, in the canteen, where everyone is congregating for lunch, hot cuppas, microwave dinners etc. 

For that reason, cost-efficient air conditioning systems will have system zoning unless you’re installing it in a factory or warehouse where zoning is going to make little difference.

That said though…

The Added Incentive

The government is adding incentive's to businesses to have co-efficient air conditioning units installed through the use of your “Enhanced Capital Allowance”.

Here’s the thing though…

You can’t just take the word of any supplier, or independent contractor who comes along to offer you a system with claims of 20% reduced energy consumption. There are fraudulent claims being made on some systems, and the simplest way to avoid them is to check the official “Energy Technology List” (ETL) which lists all the tested and proven energy efficient systems. You can even search on there to find systems, manufacturers, and if you get a quote on a system you’re interested in having installed, you can verify the model number is listed to back up the claims being made.

If a product isn’t on that list, the ECA claim is void. Air conditioning systems that are proven to reduce your energy costs will be listed. If it’s not listed, it’s likely it’s not as efficient as the manufacturers marketing materials are claiming.

Now, discussions for these purchases can be long, so before ordering any, be sure to re-check the Energy Technology List to ensure it is still listed as it does get updated periodically.

For those looking for a cost-efficient air conditioning system, by using the ECA, the entire cost of the installation can be written off through the allowance in the year of purchase. That can provide a positive boost to cash flow right away, and then cost savings throughout the life of the system. 

Facts That Finance Officers Ought To Know About Outsourcing Procurement

The outsourcing of procurement can be viewed by some in finance as handing over some or all of the control over the buying processes. The opposite couldn’t be further from the truth.

The truth is that outsourcing any of your procurement functions isn’t about passing over control. It’s about bringing aboard advisors, sometimes specialist advisors whose aim is to save in the short term and the long term simultaneously.

There’s many a way a procurement specialist could advise and bring expenditure down to increase net profits, but there’s also more benefits to be realised than the initial cost savings.

5 Ways Procurement Expertise Enhance Business Functions

1)      It adds a broader skill set to your organisation

When you outsource any or all of your procurement, you aren’t necessarily outsourcing every aspect of your procurement. If you have the resources internally, outsourcing adds more expertise to your existing department and also gives your staff access to other in-field experts. That can also lead to business efficiencies being enhanced, which is the sole purpose of procurement. Outsourcing can add to that, rather than replace it.

2)      Bottom-Line is Improved

All your expenditure throughout your organisation is net profit. If left unmanaged or even poorly managed, stakeholders will suffer. The objective of smarter procurement exercises is to reduce the overall cost of purchasing.

3)      Improved Risk Management

When done properly, after thoroughly investigating your options, you should be partnered with a professional organisation with a thorough understanding of commercial trading agreements, litigation matters and contractual expertise. They aren’t lawyers by right but they should possess a great deal of knowledge surrounding commercial contract laws, which will be able to serve you well on a professional services advisory capacity, which you may already be outsourcing anyway.

4)      Add appeal to your business

Clients are known to take businesses more seriously when they have a Corporate Responsibility Policy. They make it known that they are careful where they spend, making their businesses attractive to clients and investors alike. There’s a lot to be said for how you operate your business, and structure your processes to show you are operating ethically across your supply chain. That’s difficult to do without procurement expertise to assist.

5)      Frameworks can lay the foundations to your policies

Operating without a procurement framework isn’t a good idea. With one, everyone knows your policies, where they stand and the processes/channels to go through when buying anything of substance.

You don’t have to specifically bring aboard a procurement officer to implement a procurement framework, as you could approach it through outsourcing to harness the existing frameworks already used by established firms specialising in procurement.

In conclusion

Outsourcing some or all of your procurement functions isn’t just about realising cost reductions. That it will do, but it also brings about some expertise that many businesses don’t have access to and the ones that do, the additional expertise adds to it.

All of the processes work to enhance your businesses reputation, while minimising risk to your business through effective contract management and where possible, change management too, but at the heart of the process is always cost reductions. Sometimes that’s in the short-term, other times it’s the long game that’s played with a lot of strategy for huge savings across the board.

In some cases, when businesses are struggling financially, it’s a revision of the procurement functions that could essentially turn the entire businesses finances around by realising savings already missed through poor contract management or even a lack of market knowledge.

It pays to collaborate. 

England And Wales Rates Revaluation Analysis

It’s the review that’s supposed to happen every five years, but this time around, it’s took seven years as it was postponed until 2017.

The time has arrived for the Valuation Office Agency (VOA) to reassess the 1.96 million non-domestic premises around England and Wales to produce the latest draft Rating List, determining the business liabilities of every business across England and Wales.

…For the next five years!

For those who have only been in business since after 2008, your business rates are based on the 2010 valuation by the VOA. They review the Ratings list of all non-domestic premises every five years.

The business rates you pay are based on:

·         Your industry

·         The cost of plant machinery and necessary operational equipment

·         Your property price

·         Lease cost

Problem is…

The current business liabilities are based on post-recession property rates that have fluctuated massively between 2008 and 2015. The rates are valued two years predated; therefore the rates coming into effect on 1^st April 2017 will be based on the valuations from 2015.

Confused?

Here’s what happens….

The business rates payable are based on the properties Rateable Value two years prior to the Rates Revaluation that the VOA is supposed to conduct every five years.  

This time around, it’s far more significant than usual because this Rates Revaluation has taken seven years and come post-recession and post-Brexit. Businesses are looking for clarity while the government is looking for money.

Businesses Fund Communities

The rates paid through business liabilities are split 50/50. 50% go to central government, the other 50% to the Billing Authority (local council) which it retains for funding community projects.

The system has been described as being broken because it results in rich areas keeping more money, with the poorer getting worse because of a lack of investment. Many areas have witnessed the effects of this scheme when high street stores collapsed, causing a ripple effect across communities when local authorities faced financial strain and severe budget cuts.

The other 50% of revenue though is pooled by the Central Government and then used to fund poorer communities through Government Grant Schemes. In former Chancellor’s George Osborne’s last budget announcement, when he described the “biggest transfer of power to our local government in living memory", he was talking about changing the 50% split to allow for local authorities to retain all revenue collected. That would result in even more mayhem to an already chaotic system, so how the funds are to be split are still in discussion, but what’s not is that there are…

Huge Changes Ahead (and not many signposts)

Every business in England and Wales is going to be affected. It’s estimated that the majority of smaller businesses will see a slight fall in their liabilities, but on the other hand, there will be a 9% increase to the business rates on a national scale.

How does that work?

London Foots the Bill!

That’s right…

The vast majority of communities are going to see slight falls to business rates; however, because London has significantly higher rental charges due to higher property prices, the operational costs for retailers are going to be substantial, as high as a 415% of an increase for stores operating on Dover Street, Central London. 

The vast majority of stores in that area are multi-channel retailers and also regional with some operating globally. The increases will put financial strain on profit margins, and given some are chains, it will in all likelihood take a ripple effect. Retailers will need to protect their margins, which could see the less cost-efficient stores in other local areas either close or relocate.

The retail sector has changed substantially over the past seven years. The postponement wasn’t welcomed in 2010, and the repercussions to the business community certainly won’t be welcomed this time around.

British Telecom has already announced they will be challenging the Rates Revaluation by the VOA, as the firm will be hit with a 350% business liability increase, up from £165M per year to £743M from April of next year. An increase that BT says has forced them into threatening to increase consumer broadband prices around the London area and cut investment in telecoms technology.

Available Relief for SMBs

·         Business properties with a Rateable Value of £12,000+ have to pay the rates. Under that Rateable Value, the rates won’t apply.

·         Tapered relief will be available for properties valued between £12,000 and £15,000 so smaller sized firms will be able to get some relief from the rates.

·         Between 50% and 100% relief is available to local business owners operating in a local community with a population of <3,000.

·         Up to 80% relief is available to charities and sports clubs

·         Businesses operating within Enterprise Zones, are empty or newly occupied can apply for relief, although that’s not to say the application will be approved. It will only be considered.

The only exception to the Business Rates is religious properties, and agricultural land.

Priorities Now!

The priority for every business owner between now and April of 2017 should be on risk assessment because there is a huge risk of financial interruption when the new rates come into effect on April 1^st 2017.

As there are going to be winners and substantial losers, with the cost of doing business based on the new rates remaining in place for the next five years, there will be a transitional period for businesses to benefit from staged rate increases. It’s not going to make it any less of a financial burden because the bill will still need paid, but there will be assistance available for those with higher than anticipated increases to their business rates.

As all business owners will be affected either positively or negatively, it’d be beneficial to open discussions between tenants and landlords to begin negotiations of property lease prices in light of the business liability rate changes due to come into effect in the next six months. 

3 Tips For Devising An Effective Procurement Strategy

B2B sales are extremely competitive, however, for early stage and growing businesses, the buying of such services can be complex, or more so than you may have imagined anyway.

The truth is that no matter what you’re buying, you’re always going to have to haggle a bit. Bartering isn’t always about cost either. It’s about getting the most value from suppliers, while paying a reasonable amount for the value you’re offered as part of whatever service you’re buying.

To ensure you get the deserved and required value, make sure you have the following three essentials worked into your procurement strategy.

1)      Use contract aggregation

When there’s a significant need in your business and you assess the market to discover there’s few suppliers large enough to accommodate what you need, it may be more effective to split your contracts into smaller lots. One of the main advantages you get with contract aggregation is you open the bidding process up to smaller sized business. This is particularly useful for working with local suppliers instead of large nationals.

It doesn’t always work out cheaper, and there will be more administration involved to oversee the contracts, however from a local economy standpoint, partnering with local suppliers can be highly advantageous.

2)      Open pre-procurement discussions with suppliers

This one should be obvious but unfortunately it isn’t always done. Before approaching the market for any supplies you need, research should be done. This isn’t just a case of researching online. Get on the telephone with representatives, go out and meet some suppliers and discuss what you need, find out what’s available and gain first-hand insight into what the market has to offer.

Efficiently researching the market by opening pre-procurement discussions will let you find out a lot more about what’s available and then use factual information to put together your written brief for inviting proposals from potential suppliers.

The more information you have and therefore can give, the more detailed an offering you can put out for tendering, leading to more informative bids from suppliers.

3)      Award contracts based on quality of proposals and cost

One of the worst things you can do for your business and customers is to accept the lowest bid from any service provider or supplier. There are some companies that will deliberately low-ball during the bidding process in an effort to seem competitive. Realistically though, the offer isn’t competitive at all. What it often can be is risky. If you contract with a supplier who provides a service at cost to them, meaning there’s no profit in it, they are likely to deliver a substandard service. That’s something you could definitely do without. The more obvious risk is that it won’t be sustainable therefore you’d need to find a new supplier eventually. And probably do some grovelling with disgruntled customers due to your suppliers’ impact on your service.

In conclusion

To drive the most value from any supplier, always engage in pre-procurement discussions as part of your market research. If you feel there’s a lack of sizeable firms able to accommodate your business needs, break things down to encourage smaller or local suppliers to put their proposals forward.

Always award your contracts based on the value you can get, with a realistic figure attached to the offer. Never award to the cheapest contractor, unless you’re confident and they are too that they can deliver the service with quality and make it monetarily worthwhile to partner with your business.

The suppliers you choose to award your contracts to will be a stakeholder in your business so make sure they are a company you’re comfortable working with before you engage them for the long-term duration of the contract. 

5 Questions To Answer When Developing Your Procurement Policy

Not every business has a procurement policy and in some cases it’s actually damaging not to have this document as public funding can stipulate that the requirements for funding requires you to have one. The reason being that it ensures transparency and that when you buy goods and services, you have a policy to follow ensuring you get consistent value for money.

Even if you aren’t applying for public funding, it’s still a good idea to have a procurement policy in place for you and your staff to follow. It sets the guidelines in clear terms for everyone to follow and consistently obtain value from selected partners.

Work your answers to these 5 questions into your procurement policy

1.      Will bulk purchasing discounts really reduce costs or add to storage costs?

The majority of B2B suppliers will look to get a favourable order on a regular basis. To do so, you’ll find bulk or combined services are offered in order to maximise billings for the supplier. This doesn’t always equate to value to you though as you could agree to bulk price discounts only to find you aren’t using what you pay for, which can increase your holding/storage costs.

2.      Will you need to engage knowledge partners to speed up the time it takes to obtain a specialist service?

For technical services for your IT department, or tech equipment you’re buying or leasing, do you have enough knowledge to know what you’re agreeing to?

For more expensive and what could be considered specialist services, you don’t really want to be relying on a supplier you haven’t done business with before. You’d be going on the recommendations of others at best.

A more informative approach would be to hire a knowledge partner or outsource to a specialist partner with the knowledge to listen to what you need, provide you with an assessment and engage with suppliers on your behalf. If you’re not confident in approaching certain sectors, it may be worth including in your policy what you’ll do in the event you need a specialist service.

3.      How many of your employees will have the authority to buy goods and services and to what amount?

As this will be a procurement policy for the long term, you want to make it as evergreen as possible. Plan it with growth in mind by including members of your staff who will be authorised to engage with suppliers for any goods and services their department requires.

It may also be worth having someone senior in your company named as a procurement officer who signs off on purchases before any other member of staff can proceed with ordering goods and services, or at least allocate budget amounts per department with anything exceeding the department budget requiring authorisation.

4.      What will be your selection criteria for awarding contracts?

It’s much easier to award contracts to the right supplier when you set out clear terms of what you’re looking for from them. As an example, you could choose to look for the following criteria for suppliers to meet:

·         Quality

·         Cost

·         Use of resources / green initiatives

·         Reputation

·         Guarantees

·         Service consistency

·         Customer service

In cases when there’s high competition, using a selection criteria as a checklist will help you narrow down your potential pool of candidates to progress into discussion with.

5.      How much information needs to be revealed while maintaining commercial confidentiality? 

      There are going to be some contracts requiring you to grant informational access to third party organisations. This is increasingly happening with e-services, operating via the cloud. You must be in complete control of confidential data within your organisation and should consider how much you really need to disclose to third party suppliers.

5 Ways To Ramp Up Profits With An Effective Procurement Strategy

Procuring business supplies could probably be done more cost efficiently than it already is. It’s the fastest way to increase profits – by reducing your expenses. Even what’s considered low value contracts; can over time, add up to a wholesome amount.

To really take control of your costs, a strong focus on your procurement process is vital.

5 Ways to Enhance Your Procurement Process

1)      Work with the Total Cost of Ownership

One of a few factors considered by anything for your business is cost. Typically, you can expect cheap to last a lot less time than more expensive products. When you buy something, you want it to last. It’s why there is such a thing as depreciation accounting.

Invest in the best and you won’t need to spend more capital on replacements. This applies equally to supplies that affect what your customers receive, which extends to every area of your business including your telecoms, as you need the service to continue working for customers to reach your support team.

Every operational expense you have requires a focus on the total cost of ownership at the initial discussions before contracting, rather than agreeing to the cheapest proposal put forward.

2)      Use demand planning for inventory management

The cost of over stocking can be exponential. In particular if you’re paying for square metres in storage costs using warehouses. Those costs can become extremely pricey if you’re ordering too much and holding.

This is particularly problematic when your supplier agreement is based on a minimum order quantity. That can see you get a good unit price but on bulk order pricing only, which results in you carrying an over-stock and therefore the savings are rendered useless as they’re just diverted elsewhere.

To manage your supplies and suppliers more efficiently, plan your orders according to what your customer demand is.

3)      Incorporate TBL into your business

John Elkington coined the phrase ‘Triple Bottom Line’ back in 1994. It’s an accounting framework referred to as TBL or 3BL. The framework has three parts to it.

·         Social

·         Environmental

·         Financial

In other words, green procurement/sustainable procurement are nothing new. It’s been around for decades but essentially it’s the same as the TBL approach which has helped many a business prosper.

These days, it’s not really an option whether you go green or not. Consumers are looking to buy green products and suppliers are building in green initiatives into their operations. In some cases of RFPs, it’s stated outright that all proposals are to include a copy of the green initiative the company uses.

4)      Use strategic sourcing as a pillar for growth

When you source strategically, you aren’t focusing on any one area, such as price alone. The needs of the customer, your employees, your business, and anyone that can be affected by quality or even by a social impact such as higher waste due to poor quality is considered. It can cost more upfront using strategic sourcing, but in the long-term, there’s extreme value to be had, including increased customer longevity due to the higher customer satisfaction, which will eventually bring your cost per customer acquisition down.

5)      Manage Your Alliances

Every supplier you work with brings a new business relationship with it. You need to manage that, but what some companies get wrong is assuming that supplier management is about taking control over the service being delivered.

It’s not.

It’s about two-way communication being used to align the supplier and buyer together so that they work collaboratively to bring better value, which eventually trickles down the supply chain to benefit your customers, again, lowering your cost of customer acquisition.

The more you focus on bringing costs down in-house, improve your working relationships with suppliers and focus on value acquisition, the more profits can be reaped, whilst simultaneously increasing customer satisfaction.  

How SMBs Can Control Costs With A Streamlined Buying Process

Buying items and services is a necessary evil of doing business, its operational costs. Smaller sized businesses tend not to pay too much attention to detail and it’s a costly mistake to make when it comes to growth.

The larger your company becomes, the more you need to buy in. That’s not just for raw materials for a production process either. Even hiring staff will eventually take a team of HR personnel to recruit the right talent to the right position. PR staff is needed to target media campaigns to get new customers through your doors and paying for your products and services.

The more your company grows, the more you’re going to need to spend.

For that reason, the best time to optimise your expenditure is before you expand. Having a clearly defined procurement procedure and policy in place is the ultimate way to gaining a huge competitive advantage.

Applying the two out of three process to procurement

When you’re at the beginning of a buying stage for any business supplies, there are only three words you need to remember.

1)  Fast

2)  Good

3)  Cheap

In a perfect world, you’d have all three of the above from a supplier. Thing is though… it’s not an ideal world so you can only have two. Pick.

·        Fast and good

·        Good and cheap

·        Cheap and fast

But never fast, good and cheap.

To strike the right combination, there are a couple of things you need to do. The first is to be exquisitely clear in your objectives.

If you’re renewing a print contract, why do you want to change supplier? Is it due to poor customer service? If that’s the scenario, then perhaps fast and good would be a good option to aim for. If on the other hand you were to be sourcing stationery for the office, cheap and good quality products may be a good combination.

The trick to effective sourcing is prioritising your needs. Basing it on the level of service you need. Do you need it fast? If so, expect it not to be cheap. 

Time is money after all and if you’re in a rush to get supplies, suppliers will be in a rush to add a mark-up for the speed of delivery.

Even the Royal Mail won’t give you a next day delivery service without insisting on a premium. They’re in the fast and good category. Cheap, it’s not if you want it fast. If you want cheap, it’s second class postage which will be good and cheap, with the sacrifice of fast.

So ask yourself what you need. A fast service, good quality, or is price the deciding factor?

Once you can honestly answer that, then you move onto the next question of where do you get what you need? This is the investigative stage and it’s where you’re identifying potential suppliers.

What makes a supplier considerable? 

You can break this down into a five step process…

1) Set a well-defined criteria that potential suppliers must meet

This could be things like the supplier must be:

a)  Local

b)  Have a stringent quality control process

c)   Have a reasonable minimum order quantity

d)  Reasonable payment terms and conditions of service

e)  A clear returns or guarantee policy

f)    Have verifiable references

What you’ll find at the early stage of buying any B2B service is there are a lot more suppliers than you initially thought.

2) Define the process you’ll use

When you have your potential suppliers lined up, you need a process and a time scale for assessing suppliers against your criteria. At this stage you should also be thinking about the method of outreach. Will a trade publication be sufficient in letting suppliers know what you need, or will you have someone appointed from within your company to put RFPs (requests for proposals) out to potential suppliers?

3) Ask for the bids to be submitted

The full details of the products you need or the services you need supplied to your business needs to be clearly stated in a written document so that suppliers can get a full understanding of what you require them to do. Clarity at this stage is crucial for getting a correct quotation and the negotiations set off on the right foot.

4) Evaluate each submission received to select a partner and negotiate terms

Evaluation can only be done when all the bids have been submitted. For this reason, in your briefing to suppliers, give them a reasonable deadline to have their proposals submitted for consideration. Once that deadline is reached, evaluate your responses to narrow the selection process and decide which supplier best meets the criteria you set at the beginning stage. Any supplier submitting a bid past the deadline should probably be dropped from the process as they’ll have missed a deadline before you start working together. Start the way you mean to go on. 

5) Monitor the supplier continuously

Even the best suppliers will have a hiccup here and there when something goes wrong therefore plan for that to happen by assigning someone as a named contact to oversee the contract. They’ll be responsible for performance reviews ensuring the supply provision is overseen and also for managing the relationship with any key person involved in the service provision.

In our experience, rapport has been essential to long-lasting relationships with suppliers, making it easy to sustain a healthy working relationship that benefits both businesses while making the renegotiating stages flow much smoother and more beneficial. 

Ultimately, the better the preparation is in the early stages of the buying process, the better clarity there is, resulting in clear communication with much less misunderstandings. 

Image courtesy of krostewitz.com.

Expense Automation Finally Reaches The Cloud With Expensify!

Cloud accounting has revolutionised the financial sector, with some major players breaking through and creating real world solutions that just plain work for simplifying the accounting process.

Where most fall short is with expense reporting, because it’s like all the major platforms need integrated with add-ons/additional apps to complete the package.

Part of managing your business requires you or your finance department to stay on top of all the expenses. That’s a tedious and time consuming chore in itself.

Until you start with Expensify!

In our opinion, Expensify is revolutionising how expense reports are automated, created, shared and submitted.

What it does:

·         Smart scan – Is great for filing away receipts

·         Auto bank and credit card imports – This goes further to match the tags on your digital receipts to the corresponding bank or credit card transactions. If there’s no match from your bank or credit card data when you import it over, it’ll be created as a cash expense.

·         Distance Tracking – This lets you/your staff insert mileage either as a total distance, or you can set it a policy level to cover the maximum allowance employees can claim as an expense, or use the standard mileage allowance. The choice is yours when you set it up.

Other options for tracking mileage is to use the GPS setting, which will also record the data of where you or your staff travelled to and from to warrant the expense, or users can input the odometer data to file mileage expenses.

All of that done via a mobile app!

Faster reimbursements to employees

If there’s one thing going to get on your staff’s nerves, it’s waiting too long to get paid back what they are owed. What Expensify have done is included an option to automatically reimburse staff based on amounts predetermined by you.

What you can do with this is set a maximum limit that you’re happy to automatically reimburse, provided that your policy has been met, which you can set to include a receipt, ensuring that the expense report submitted to you has the necessary attachments for you to attach to your own reports and reclaim the expenses through your business accounts.

The Real Benefits of Expensify is Simplifying the Workflow for Finance Departments

With any number of employees submitting receipts for expenses, it creates a monster workload to review expense reports and then account for them by filing in the appropriate categories. Then depending on your company policy, you may have chain of command where the reports need approved and then sent up the chain of command for final approval and payment processing to reimburse the expenses to employees.

The Expensify app has a user friendly interface so anyone within your company will be able to use it. Only those authorised can manage the workflow though.

You can use this to create policies at management level, which will then instruct users what they need to do before they are able to file their expense reports; no more back and forth with incomplete reports. If it’s not got the data you need, it can’t be submitted for approval.

You can require your staff to tag expenses to an appropriate category, such as travel, meals, accommodation, mileage or entertainment. For each expense filed, you’d be best to set the policy to only allow reports to be submitted with a receipt attached.

Employees will be able to submit their reports with the population of a few fields and attaching the receipt and then just clicking submit. When the report is submitted, it sends an email to whoever is set up to manage the expenses letting them know there’s a new expense report awaiting their review.

Depending on how your policies are set up, the person reviewing the expense report submission can approve and reimburse or they can forward it further up the chain of command for someone senior to authorise or deny it.

The workflow can be as simple as authorising one person to sign off on legitimate expenses, or it could be used at enterprise level, passing expense reports from department to department until it receives the final seal of approval.

Payments can be reimbursed automatically and you can set filters to only pay amounts under the value you specify, ensuring that by enabling auto reimbursement that you aren’t going to run into cash flow problems.

Expensify uses the slogan, “expense reports that doesn’t suck” and it’s actually true of the product they have. What can suck about getting your staff more motivated by giving them what their owed faster and thereby never leaving them out of pocket for longer than necessary?

Besides, your finance people need this because it’s automation of a tedious task and will work to increase productivity and boost staff motivation.

When there’s something you can automate, that’s what to do. Now you can automate your expense report creation, submissions and automate the reimbursements of legitimate business expenses to your employees, whilst simultaneously ensuring that you have all the required information for your own accounting records.

We think it’s neat!

Getting Ahead With Procurement Processes

It doesn’t matter what size of company you have, you will have suppliers, overheads and bills coming in that need paying. You’re also going to have contractual obligations, whether or not you have an internal legal team and/or procurement team at your disposal.

No matter the size of your operation, you must control your overheads otherwise they’ll rip your organisation apart.

Late payments, supplier difficulties, delayed deliveries, expired contracts, rates increases etc. The list goes on.

What tends to happen in business though is the early stage start-ups focus on strategic growth without concern for the consequences.

Growth will happen when you put the efforts in and focus on strategic growth tactics, but when you do find your organisation growing, so too will your obligations, probably your staff and most certainly your overheads.

The more obligations your business has, the more reliant you will become on your suppliers. Without careful management, you risk your business being placed in a vulnerable position should your supplier find themselves with a competitive advantage because of your inability to control your procurement processes.

You absolutely must have processes in place, policies to control them and strategic systems to manage them both. Without those in place, your overheads will increase - substantially if you’re not careful.

Why be bothered with all the hassle?

If you’re focusing on growth right now, get yourself ahead by preparing for when you reach that stage. Visualise your business a year from now, two years from now, five years from now and you’ll likely see yourself going places.

Perhaps you’ll have a team of 50 employees or you could expand your operations by opening on more sites, hiring more people to aid in your expansion, in which case, prepare for that time.

What procurement specialists can do to help you prepare

If you don’t have the capital to invest in your own procurement staff to get things under control, outsource your outsourcing. The reason being that whilst the cost-savings will take longer to experience, you won’t be wasting cash flow in the short-term by spending on growth strategies to see the fruits of your labour wasted. You will retain more of your profits by having proficient supplier management processes in place, preventing things getting out of control.

All too often, what happens is companies experience expansion, then realise too late that they’re spending way more than they’re comfortable with and then have to bring in experts in procurement to clear up the mess made by inefficient sourcing and supplier management.

It prevents the battle of all battles…

When companies look to bring about cost efficiency, procurement experts are trusted to deliver on savings. To do that, it takes strategic sourcing, contract reviews, a huge advisory role and often a complete transformation of sourcing due to non-existent procurement policies.

As such, the savings commitment you will be looking for, will take longer to deliver because more tactical groundwork will need to be done before savings can be realised.

For any business focusing on growth strategies right now, get prepared for the increased obligations that accompany that by putting in place efficient procurement policies, and processes to manage the increase of suppliers and the relationships that come with them.

The more proactive you are with your procurement; the more savings you’ll lock-in before you start wasting it on inefficient sourcing methods. 

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Why Incorporate An Exit Strategy Into Your Contracts?

When you enter into business critical supplier relations, there is an all too often neglected area within the contract and that’s the plan to disengage.

Since the relationship between suppliers and clients are best when they’re mutually beneficial, the exit strategy needs to meet the same requirement.

That being said, the best time to discuss this is not during negotiations. It’s after the supplier has been partnered with you for a period; a working relationship established, rapport built and comfort grown for both parties to come back to the table and enter into further discussions about exiting.

The only thing that should be discussed during the negotiation process is the timescale for both parties to meet, after say six months after the supplier’s contract commences to discuss a strategy for disengaging.

It’s best to have this in place to ensure that the continuity of service provision remains the same, even if an existing contract is being terminated or transferred.

What a supplier won’t be comfortable with is too short a notice for your contract ending. They will want to know more about the “what if” scenario of losing a contract – and you your supplier.

Most will require more than thirty days for business critical supplies.

For longer term contracts of say over five years, a good rule to go by is one month per year. Using that as a general rule of thumb… if you’re on a three-year contract, a three-month notice period to terminate would be sufficient. That would give your supplier plenty of time to source new contracts and replace lost revenue, whilst retaining their continuity of service to your business within the final stages of the contract. At the very least, it’s risk management for both suppliers and clients.

Why would you end a contract with suppliers?

1)      It’s run its course.

2)      To re-enter into the tendering process, for which existing suppliers can also be a part of to keep your offers competitive.

3)      If either company feels the partnership is no longer beneficial, they can begin. negotiations to exit out the contractual obligations. If this is the case, you’ll be glad to have discussed the exit strategy beforehand as both companies will know the process to follow and the actions each party is responsible for.

4)      Lack of performance by either supplier or client or both.

5)      Better deals elsewhere.

That’s just five reasons that are pretty standard for contracts terminating. Nothing lasts forever.

When there are assets involved, it’s even more imperative that this forms part of your procurement process. People’s jobs could depend on it.

Then there’s the issue of who owns what as there are many business supplies for which you are loaned equipment from a service provider for them to take care of supplies and maintenance. If that’s the case, there will be ownership issues and equipment to be transferred back… not to mention any costs involved in contract cancellation without a good reason for doing so before the contractual period is met. These are your early termination fees and they are fairly typical for large supplies that are critical to business functions.

How to raise the issue of disengagement during negotiations

As you’ll understand, losing contracts is not something any supplier wants to discuss because it implies you’re leaving or not really keen on the idea of working together.

It’s not necessarily meaning you are parting though. It’s only a process you want to put in place to ensure you continue getting value. And that your potential suppliers aren’t too eager or blind sighted by the revenue projections that they fail to consider the risk.

Instead of calling it a disengagement process to address an exit strategy, you can call it a re-engagement process.

All you do here is assign a named contact from your company to deal with the re-negotiation process. It can involve opening up your horizons to others in the field and inviting your supplier’s competitors to enter the tendering process, whilst your current supplier is actively engaged in the process. That will help them feel more comfortable with continuing with your processes, and with your support. 

Even if they don’t have that, it’ll force them to be competitive in the tendering process. Their advantage is they will have the data to know how much it’s costing to supply your company, for which they may be able to provide an even better proposal. Either way, existing suppliers are in a good position for re-entering the tendering process to renew contracts. Just because you have existing suppliers in place should never mean that you stick by them through loyalty, unless there’s a significant advantage to your company for doing so.

Why?

Because…

It's stability for both businesses

Both suppliers and clients need stability and that’s what the exit strategy meeting is designed for. To ensure business continuity, even during a re-tendering process.

No service disruption is one stipulation to ensure is covered within your contract. The other is that any employees involved in the transitions are aware of what’s happening and kept in-the-know. This is particularly of interest to the recruitment sector when staff may be on two year contracts through a temporary staffing agency. Even if your supplier needs to have staff on premises to ensure service delivery with minimum fuss, ensure the people they have in place, know what’s happening with their jobs.

Always ensure everyone involved with the contract knows where they stand, are involved in the process, and aware of what happens, when things happen, and also that the “what ifs” are addressed. Any questions, have them answered and sooner rather than later.

The more that both companies (and employees) know about the contractual obligations and the disengagement process, the more comfortable the relationship will be as there won’t be any fear of the unknown involved.

Keep things simple and discuss exit plans during the negotiation stages of contracting out.  

Image courtesy of psow.edu.