Urgent need to reduce core business costs post-lockdown
By Joe Gallard, CEO of Reducer
By Joe Gallard, CEO of Reducer
The world has been upended by the coronavirus pandemic.
For months, consumers have had to adapt, businesses have had to tackle new challenges, and accountants have had to facilitate these changes whilst juggling with looming deadlines and maintaining their own firm’s stability.
Though lockdown is beginning to ease, the business landscape will not return to normality in an instant. On top of the pressure dealt by public restrictions and supply chain disruptions, SMEs suffered a blow to their revenue as customers became accustomed to a new way of living. The pragmatic attitude adopted by consumers during the pandemic is expected to continue for some time, leaving revenue uncertainty lingering for the months to come.
With revenue up in the air, the best way for your clients to increase their business resilience is to improve their spending habits and minimise their costs. Securing stable cash flow will be vital for businesses’ survival in the post-lockdown period, and having cash on demand will insure your clients against any further hiccups in the road ahead.
More importantly, as government support and the job retention scheme approach their end, businesses already struggling with cash flow will need additional support to keep afloat. Failing to spot overspending could hinder your clients’ ability to survive and succeed.
Businesses rely on energy, water, and broadband and telecoms to operate. It’s a cost of doing business that cannot be avoided. However, each year businesses are overspending by £8.7bn on their energy, insurance, and telecoms services. On energy alone, 80 percent of businesses are found to be overspending. Combine that with the plethora of other services your client relies on, and it’s easy to become overwhelmed with piles of bills that continue to grow.
The good news is because it’s so common for businesses to be overspending on their bills, it’s highly likely that your clients will be able to find savings.
Typically, a business’ expensive bills can be attributed to paying out-of-contract rates, which are hiked prices given by suppliers when they auto-renew an existing contract. Failure to pay attention to supplier contracts can leave businesses paying up to quadruple the standard market rate for their services, creating a dent in their cash balance that could have otherwise been used for building their business.
Reducing core business spend is also a great place to start because opting for a different supplier for services such as electricity, gas or water has no effect on the supply that your client will receive. Unless your client opts for renewable sources, energy and water suppliers each use the same wholesalers, meaning that the supply itself does not change. Whether you go for British Gas or Scottish Power, energy will be supplied to your premises through the exact same lines. The only difference will be the prices your client pays and the company responsible for their billing.
As an accountant, you can help to minimise your clients’ spending by reviewing the services they buy and switching them to cheaper suppliers.
There are two ways to do this. You could opt for the manual process of comparing suppliers yourself, or use a cloud-integrated tool like Reducer to handle the comparison for you.
If handling it yourself, begin by creating a spreadsheet to collate each spend area, its monthly cost, and its contract end date. Contract end dates are important as your client won’t be able to leave their current supplier without paying a hefty termination fee, so knowing when to switch can avoid an unnecessary burden on your client’s cash flow.
Once you know the key areas to look at, you’ll need to compare around six suppliers for each spend area. With few protections against harsh contract terms, you’ll need to look carefully at the terms of each offer to ensure your client doesn’t get stuck in a bad deal.
After you’ve narrowed down potential suppliers, try your hand at negotiating before settling on a recommendation. From there, your client will need to sign a new contract and the switchover will commence.
In lieu of the time consuming cost comparison process, Reducer offers cloud-based accountants a way to manage their clients’ costs in just a few clicks. Prices can be compared from eight spend areas, comprising: electricity, gas, water, card payments, mobiles, broadband and telecoms, fuelcards and waste and recycling.
By integrating with Xero or QuickBooks, Reducer is able to extract the line item data from your clients’ bills to accurately compare the prices they pay against tariffs from over 150 suppliers.
Each client will then receive a personalised cost savings report detailing the offers from various suppliers and the exact amount they can save.
If they choose to switch, Reducer handles all the admin to make the switch as seamless as possible. It’s quick, it’s easy, and it’s completely free.
For more information on how you can support your business clients’ success post-lockdown, download Reducer’s whitepaper on ‘Adapting to a new normal’.